Remember when on Friday, following the summary of the proposed Italian austerity measures, we said that "within a few weeks we expect the strike (and riot)-cam to be planted firmly in the Piazza Navona and across the streets ot the Trastevere in capturing the latest round of European indignation" and some assumed this was yet more sarcasm? Nope. As the AP reports, "the leader of Italy's largest union is threatening a general strike against an austerity package that Premier Silvio Berlusconi's government hastily pushed through to balance the budget by 2013 and avoid financial collapse. The threat came amid mounting criticism Sunday of the euro45.5 billion ($64.8 billion) package passed Friday in response to demands by the European Central Bank." Incidentally, $64.8 billion in cuts... out of $1.8 trillion in debt....that makes even the farcical $2.1 trillion deficit cut plan passed by the muppets in DC appear gargantuan in context. What happens when S&P tells Italy it has to increase the cuts fivefold to avoid more downgrades? At that point the strikes in Italy will be 24/7/365. And what happens when S&P wakes up and realizes that the same is applicable for France, and that any realistic cuts will force French GDP, which on Friday came at a very disappointing 0.0%, to turn wildly negative, as strikes next shift from Rome to Paris... Just how stable will that vaunted AAA rating of France be at that point? But of course, nobody will have been able to see it coming.
From the AP:
Critics say the package — a mix of spending cuts, job cuts and tax increases, including a "solidarity tax" for high-earners — will strangle Italy's stagnant economy, which is now expected to grow by only about 1 percent this year.
Other critics, including nine members of Berlusconi's own coalition, say it unfairly targets the middle class and fails to tackle Italy's massive tax evasion problem.
Susanna Camusso, leader of the CGIL labor union, criticized measures aimed at liberalizing Italy's labor market and targeting its pension system, saying a strike is the only way to "change the inequity of this package." She told the La Repubblica newspaper that union officials will meet Aug. 23 to set a strike date and invited other unions to join.
In keeping with the scapegoating times, "it is all Germany's fault":
Both Berlusconi and his finance minister, Giulio Tremonti, have defended the government's actions. Tremonti insisted the debt crisis could not have been predicted but said it could have been avoided with the creation of Eurobonds, a new joint bond backed by all 17 countries using the euro.
"We wouldn't have gotten here if we had had Eurobonds," Tremonti told reporters, calling for more "integration and consolidation of public finances in Europe."
Germany, the strongest economy in the eurozone, has rejected the Eurobond idea.
Ah yes, Germany whose average citizen is far more sophisticated when it comes to matters of failed monetary (and fiscal) policy, than Joe Sixpack, and which now bears the bailout of Europe on its shoulders has indicated that it will agree to a Eurobond idea over its dead body, is now the target of a full blown media campaign orchestrated by the Springer Group, affiliated closely with the CDU/CSU, via its publication Die Welt, whose headline article seeks to promote the idea of Eurobonds as can be read in "Germany becomes the paymaster of Europe" - to wit: "The federal government is now willing, if necessary, to accept a Eurobond transfer union." Lovely. Too bad such strawmen don't really work out when your population is actually 'quote unquote' smart and can see beyond headline propaganda.
We are fairly confident that in having to resort to such blatant last resort media manipulation, it only makes the Eurobond idea even more unrealistic at the grass roots level, and with Merkel facing election defeat after election defeat, even the attempt to pass Eurobonds will have to wait until the next popular vote.
However, we are also confident, that headline scanning vacuum tubes will certainly view this latest attempt to kick the can for the insolvent eurozone by a few days, as one meriting a 100 pip surge in the EURUSD, and a corresponding spike in risk assets, until naturally, German authorities deny the whole story.
For those who have not figured it out yet, baffling robots with bullshit has proven to be the most successful central planning strategy of 2011.
Anyway, back to Italy, where we read that even Golum has voiced his appreciation over this latest non-event:
EU President Herman Van Rompuy called the measures were "crucially important" not just for Italy, the eurozone's third largest economy, but for all of Europe.
"I fully support and welcome the timely and rigorous financial measures," Van Rompuy said after talking to Berlusconi on Saturday.
Berlusconi insists the measures will be passed by parliament quickly when lawmakers return from vacation. But many — from the opposition, the business world and even Berlusconi's own ranks — have urged parliament to make amendments.
And when all the "amendments" are said and done (following the requisite vacation breaks of course), the end result will be a whole lot of nothing, especially after the locals raise hell for a day or two over fears what a solidarity tax may mean for the common entitlement good.
In the meantime, stability has returned to the markets... where the ECB is now the sole buyer of Italian debt, and the Consob has made shorting illegal. We are only waiting for Italy's vacationing parliamentarians to make strikes illegal as well, and then all shall truly be well.