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Italy Is The New Greece, As Strikes Shift From Syntagma Square To Rome

Tyler Durden's picture


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.


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Sun, 08/14/2011 - 15:09 | 1559286 falak pema
falak pema's picture

will they torch Berlusconi's avatar at Piazza Navonna like a bunga bungad statue of unliberty?

Sun, 08/14/2011 - 17:49 | 1559753 slaughterer
slaughterer's picture

Sadistic S&P wielding the whip on all the world's delinquent sovereigns.   Credit analysts in furs.  

Sun, 08/14/2011 - 15:14 | 1559291 Cultural Capital
Cultural Capital's picture

London, Tunis, Cairo, L.A.! is the Multitude on the way?

For those youth's out there without a future, it might be a 'good strategy' for those so inclined to threaten 2x as much physical destruction of private property for every Euro in 'austerity' measures. Such an act would obviously undermine not only the 'economic rationale' for austerity but also undermine bond creditor will power to prop up the vampire squid et al.  Just a thought..

Sun, 08/14/2011 - 15:14 | 1559295 cossack55
cossack55's picture

But they can't print stores, homes and autos.  No fair.

Sun, 08/14/2011 - 16:17 | 1559465 spiral galaxy
spiral galaxy's picture

Wait! I saw on the Michelob commercials were they hold up their iPhone doohickey to the scenery and with a flick of the finger can change urbun to rural, fill oceans & beaches with babes, place themselves in the middle of a party, etc.  Why not the same with stores, homes, etc.?  It's all one big fantasy!  You just need the right app ...duuuude! :-)

Sun, 08/14/2011 - 16:37 | 1559529 Oh regional Indian
Oh regional Indian's picture

Nice spiral....


Sun, 08/14/2011 - 16:55 | 1559592 cossack55
cossack55's picture

My fault. I boycott APL, hence, no iphone. Plus, I don't know shit bout no apps. 

Sun, 08/14/2011 - 17:54 | 1559768 slaughterer
slaughterer's picture

"baffling robots with bullshit has proven to be the most successful central planning strategy of 2011"--no truer words said on Sunday August 14th, 2011.  I put Zero Hedge up there with Napoleon and Charles Bukowksi--actually, somewhere between.  Let's have Mickey Rourke play Tyler the snarky analyst in the movie.  

Mon, 08/15/2011 - 04:53 | 1560823 janus
janus's picture

yeah, man, i thought he really crescendoed perfectly with that pithy lil bit...but, really, i hate to pick anything out for fear of diminishing the effect of the whole.  the word masterful comes to mind -- well, lots of others pile atop it, but "masterful" keeps asserting itself.  okay, commanding too...that sticks; so we've got masterful and commanding -- the that settles it then:

master and commander

PS i swung by the NYTimes today and checked out the editorial section (old habits and all that); just pathetic milquetoasters gesticulating the rites of some worn out pantomime for the thoughtless and unreflective hordes.  i pity da fools.  ZH is shaking up the world and reporting on it -- yeah, bitchez, newzmakers and newzbreakers! nyt, eat that withered corpuscular heart of yours right out -- , but i guess that isn't fair, is it, nyt?  you are, after all, peppered in the news on corporate bankruptcy...tell carlos 'slim' the mexican that janus says "hola" (and say it just like that, he'll know what you mean).  anyway, my point is, ZH is reporting on THE MOST IMPORTANT NEWS OF OUR AGE and doing it in a way that is superlative in every regard.  these things must be said.  janus comes from a VERY critical enviornment, and i believe in the merits of thoughtful critique; but i really have nothing bad to say; moreover, i'm so over-awed by some of the work on this site that i can't contain my enthusiasm...all the more so when i see it so starkly juxtaposed against the old grey lady and her ghastly entropy (lil boy, yer pappy, Punch, well, if he could only see you now...what would the old man say, huh?  what have you done with the Holy NYT, you affected little twerp).

well, as far as things go, maybe i'll try to be the HL Menken/HS Thompson/Cicero/Demosthenese/Martin Luther/John the Baptist/PG Wodehouse/Mark Twain/et. al. of ZH...all i can do is give it the ole college try.  tally ho, etc. 

"Verily, verily, I say unto you, Except a corn of wheat fall into the ground and die, it abideth alone: but if it die, it bringeth forth much fruit."


Sun, 08/14/2011 - 15:17 | 1559293 Caviar Emptor
Caviar Emptor's picture

Battle lines: labor versus capital. Nobody wants a pay cut if bailouts favor capital.

Sun, 08/14/2011 - 16:50 | 1559576 sessinpo
sessinpo's picture

This is actually a battle between the unproductive socialist and productive capitalist. The unemployed will become a part of the former just to survive. Gov unions are a gross manifestation of the former. Eventually, when things really get bad, private sector unions will enter the battle.

Roubini is a moron just like the Keynsians. Whether a country is capitalistic or some form of statism, there is always a select few (the ruling class) that control the majority of wealth. All systems have flaws and the elite of any system exploit those flaws.


Sun, 08/14/2011 - 15:15 | 1559298 Global Hunter
Global Hunter's picture

"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."

if..if...if...if only I hadn't run out of money I would still be smoking crack.

Sun, 08/14/2011 - 15:22 | 1559317 vast-dom
vast-dom's picture can smoke crack on credit........for only so long tho.

Sun, 08/14/2011 - 15:23 | 1559320 zorba THE GREEK
zorba THE GREEK's picture

If my aunt had balls, she'd be my uncle.

Sun, 08/14/2011 - 15:50 | 1559385 snowball777
snowball777's picture

Moustache: necessary, but not sufficient.


Sun, 08/14/2011 - 18:06 | 1559807 GCT
GCT's picture

France and Germany both just announced no Eurobond in the cards.

Sun, 08/14/2011 - 18:32 | 1559884 TwelfthVulture
TwelfthVulture's picture

The first "pregnant man" had a beard and moustache.   (Also, a vagina.)

Sun, 08/14/2011 - 15:16 | 1559299 Transitory Disi...
Transitory Disinflation's picture

When there is Greece on the slide the ride just speeds up faster and faster.  BurlesqueOnly can only hold his head (getting shoe polish on his hands) and Merkel changes her flight plans on that helicopter!!!

EU will soon be Ewwww

Sun, 08/14/2011 - 15:16 | 1559300 Sudden Debt
Sudden Debt's picture

Strikes can't be made illegal. What they can demand is a minimum required workforce to work to keep the basics running. Transport, law inforcement, energy.

But there will be hughe strikes because the number of government employees in Italy is hughe and they'll feel the cuts first.


Sun, 08/14/2011 - 15:21 | 1559315 Caviar Emptor
Caviar Emptor's picture

You don't know the Italians. They been there many times. The crowd has power

Sun, 08/14/2011 - 15:16 | 1559302 desirdavenir
desirdavenir's picture

why is the 64 billion in cut laughable ? FYI, it is a per year permanent reduction, which in 10 years amount to 1/3 of the outstanding debt. On its face would be between 4 and 5 trillion in US governement accounting...

Sun, 08/14/2011 - 15:38 | 1559339 falak pema
falak pema's picture

You sound like a french bureaucrat with a penchant for numbers that never apply to home country. I love lateral thinking that is not a two way street....Never at home always in the neighbour's...Oh, those glass houses!

Also on a ten year planning period, Italy's growth would be bled white w/o structural changes to increase competivity and producitivity. You can increase taxes, cut government spending but it has to be in the context of competitive advantage. A strong Euro means Italy like all club Med is toast in terms of growth.

Sun, 08/14/2011 - 17:07 | 1559627 desirdavenir
desirdavenir's picture

very true on lots of points. But the thing is that many on ZH argue for a zero deficit rule that would have the same effect in the US as the austerity in Italy or the upcoming zero deficit rule in France (the debate focuses only on whether it should apply also for 2012, an election year, or just starting from 2013...)  Europe must go through a deflation episode before it can have growth again, as do the US. But the question is why on ZH keynesianism is bad for the US and good for Europe, and austerity is bad for Europe and good for the US ?

Re club Med vs Germany: there is less difference between Greece and Germany than between Alabama and Massachussets. 

Sun, 08/14/2011 - 18:28 | 1559809 falak pema
falak pema's picture

ZH is full of traders who don't want that the US lose its supremacy, all the while acknowledging that the current world problem is based on break down of US capitalism, from their perspective based on Keynesian central governance by FED+WS+Obama. 

This view underplays the currency and interest based derivative war being waged by US HFs on the rest of the world. This is a race down to the bottom that the US oligarchy imposes on the world based on USD reserve currency status, and US military hegemony. It has nothing to do with the origins and thus the root causes of the crisis which is perversion of Oligarchical power capable of leading to the collapse of the world economy.


So from my perspective the majority view in ZH on this issue is schizophrenic. They recognise the problem but duck the need to regulate all capitalistic plays originating in US (HF naked speculative plays, FED QE printing, Pds support of WS ponzi asset and commodity bubbles). Its not the market that will solve this mess. It is strong POLITICAL LEAD IN THIS DIRECTION WORLD WIDE.

Coming back to Europe, it is clear EU banks and Euro are totally sucked into the debt crisis by its own past actions, initiated by greedy EU private banks. As for the solution it may be Euro bonds, but this requires that EU nation states harmonise fiscal policies and go back to golden rules of Mastricht (3% deficit, 60% debt of GDP). We are a million miles away from that. 

But first of all there has to be concerted action to juggle the financial ponzi emanating from unregulated Hfs, from unregulated shadow banking in US, from unregulated naked  derivative plays.

As for your comment about Greece and Massachussets, you forget that the US has a federal structure, and that EU does not. It urgently needs a federal solution or it will die.

We are heading for deep depression due to asset deflation. Nothing can solve that as the energy crunch world wide is inevitable. Lets see what EU has to propose on this front. 

Mon, 08/15/2011 - 04:47 | 1560821 Pizza spaghetti...
Pizza spaghetti and mandolino's picture

This is one of the very few comments here with a grain of salt. It seems howver that Tyler and ZH believe Associated Press and do not go beyond what the Anglo-Saxon press feeds them with. Mrs. Camusso is the leader of the Italian "largest union". Its latest general strike was a resounding flop. So a threat of general strike by the Italian "largest union" is not a sign of an imminent Italian Syntagma square but pure thin air. To the ears of Italians living in Italy her words are not simply laughable. Any Italian living in Italy understands from her void threats that the tax increases and budgetary cuts are indeed going to be converted into law fairly shortly.

Dear Tyler and dear ZH readers don't believe Anglo-Saxon press on Italy: it doen't understand the country and it has a significant track record for getting it all wrong.


Sun, 08/14/2011 - 15:17 | 1559303 Seasmoke
Seasmoke's picture

The Vatican must be very nervous

Sun, 08/14/2011 - 15:35 | 1559343 falak pema
falak pema's picture

they have more money than Warren Buffet.

Sun, 08/14/2011 - 15:52 | 1559390 snowball777
snowball777's picture

Mostly in the form of combustible assets. Poor choice that.

Sun, 08/14/2011 - 17:22 | 1559668 Cast Iron Skillet
Cast Iron Skillet's picture

they have quite a bit of non-combustible gold & silver ...

Sun, 08/14/2011 - 16:43 | 1559552 Oh regional Indian
Oh regional Indian's picture

We'll only know that when there is a War on Buffet.


Sun, 08/14/2011 - 15:19 | 1559309 Cognitive Dissonance
Cognitive Dissonance's picture

Looks like the inner insanity is following the global exponential intensity curve nicely, don't you think?

Sun, 08/14/2011 - 15:22 | 1559318 Caviar Emptor
Caviar Emptor's picture

Yes. It's not "Normally" distributed, however. Sharp shoulders

Sun, 08/14/2011 - 15:30 | 1559335 ZeroPower
ZeroPower's picture

Fat tails FTW

Watch Italy, watch France for the real show... but all it takes is one bank, a single bank in the non-periphery like Belgium or Hungary. Wait.

Sun, 08/14/2011 - 15:37 | 1559348 speconomist
speconomist's picture

Hungary is not part of the Eurozone.

Sun, 08/14/2011 - 15:43 | 1559362 ZeroPower
ZeroPower's picture

Yes. But Hungarians are highly tied to the Eurozone and, being part of the EU, their banks have extremely close ties to the major European ones. One failed .hu bank means lots of losses for the core banks, which starts the collapsing domino - although i suspect its already started and is just starting to progress. Single example, though many others exist: very low Core Tier1 cap ratios at Santander, SG, UniCredit.

Last quarter's results dont reflect the real range the banks are in, i.e. <8% which is deadly for them.

Sun, 08/14/2011 - 15:45 | 1559371 Global Hunter
Global Hunter's picture

Euro banks lend to Hungarians, ZH had an article a while back about Austrian bank exposure to Hungary mortgages denominated in Swiss Francs.

Sun, 08/14/2011 - 17:33 | 1559702 DaBernank
DaBernank's picture

Bing, bing, bing! We have a winner. Include much more of Eastern Europe in this as well, all the way to the Ukraine. MASSIVE european bank exposure there. I have been trying to tell the comment section here, I live in Austria and things are way out of hand over here. Degrees of leverage in lending are worse than even in the US. Common to take out a mortgage with zero money down for 120% of the price of the property. Euro cheerleaders (who must not read any european press) keep crowing that EURUSD is "still trading at 1.42, it's the new reserve currency!" ... Hold that currency at your own risk. I keep only enough to pay the bills for the month in Bank Austria (aka Unicredit)

Sun, 08/14/2011 - 18:40 | 1559909 magpie
magpie's picture

Does it start crashing once Asian CBs have stopped rebalancing their portfolios and the US really begins to withdraw liquidity ? Who knows when that will be.

Sun, 08/14/2011 - 16:03 | 1559427 Nozza
Nozza's picture

P ortugal
I reland
G reece
S pain
H ungary
IT aly


Sun, 08/14/2011 - 18:34 | 1559895 smiler03
smiler03's picture


Mon, 08/15/2011 - 07:50 | 1560959 speconomist
speconomist's picture

France is missing.

Sun, 08/14/2011 - 18:23 | 1559839 RedPirate
RedPirate's picture

In Belgium, most public societes switched their accounts from ING to Dexia to boost their liquidity. Similar goes for France and SoCGen. And it's a liquidity not to be underestimated. They can pool this, I'm pretty sure of it. And that Italy is next Greece? Well that's just crap...

Sun, 08/14/2011 - 15:20 | 1559313 zorba THE GREEK
zorba THE GREEK's picture

"Of course, nobody saw it coming"

I saw it coming.

Sun, 08/14/2011 - 15:20 | 1559314 vast-dom
vast-dom's picture

"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."

We need an expose on these robots. A ZH study. More detailed than previous posts with some direct central panning ties.


How about it?

Sun, 08/14/2011 - 15:44 | 1559368 DeadFred
DeadFred's picture

You stole my quote! This system is the perfect set-up. TPTB control the markets and control the MSM. It is a simple thing to program the algos to do this and that then tell your editors to include this quote and that headline. A small amount of coordination between the handful of media moguls and you direct the majority of the trading on the exchanges, all nicely front-run to your advantage. Small wonder the banks were reporting perfect scores on trading. I'll bet they really hated the tsunami.

Sun, 08/14/2011 - 15:22 | 1559316 johnQpublic
johnQpublic's picture

not taking the french to financial collapse is like not bringing your accordian deerhunting

Sun, 08/14/2011 - 15:25 | 1559324 zorba THE GREEK
zorba THE GREEK's picture

"not bringing your accordian deerhunting"   LOL

Sun, 08/14/2011 - 15:29 | 1559331 Licio Gelli
Licio Gelli's picture

General strikes in Italy are a dime a dozen

Sun, 08/14/2011 - 15:54 | 1559397 snowball777
snowball777's picture

Have you ever seen one with a positive impact on GDP though?


Sun, 08/14/2011 - 15:29 | 1559332 magpie
magpie's picture

German parlamentarians are out on vacation too, so paymistress Merkel is on her own.

Mon, 08/15/2011 - 07:51 | 1559341 speconomist
speconomist's picture

+100 pips? Are you sure Tyler?

Edit: ended being around 80 pips, not bad!

Sun, 08/14/2011 - 15:40 | 1559356 Pure Evil
Pure Evil's picture

The Hajji gave us plenty of entertainment for the spring, and the Mediterranean Wog riots were good for the summer doldrums, while the Goyim uproar only lasted about a week, but we definitely need Guido and Cheese Eatin Surrender Monkey meltdowns to carry us into the holiday season.

Hopefully by then the ire of the Fritz will be up and he can then once again blitzkrieg his way through the east using the Russkies to greece the tracks of their tanks.

Sun, 08/14/2011 - 15:51 | 1559387 WestVillageIdiot
WestVillageIdiot's picture

The Ardennes has proven to be about as impentrable as Jenna Haze. 

Sun, 08/14/2011 - 15:43 | 1559363 time123
time123's picture

World leaders must focus on incentives to grow their economies much faster than they currently do. This is the only way out of this mess. 

If new investments are made in Greece, Portugal, Spain, Ireland, etc. their economies will grow and the debt to GDP ration will get better, rather than worse off per the current approacjes utilized.


admin at

Sun, 08/14/2011 - 15:52 | 1559393 WestVillageIdiot
WestVillageIdiot's picture

I love when people misspell "ratio" and instead spell "ration".  It usually makes a sentence very interesting.  It is even better than the "lose" and "loose" misspellings.  We have ratios in 2011.  In 2015 we will surely have rations.  K-rations should be awesome for the troglodytic inbred masses. 

Sun, 08/14/2011 - 15:58 | 1559413 DeadFred
DeadFred's picture

The incentive would be to Get Out Of The Way by axing the wall of regulations that kill small businesses. The uncertainty and risk from the rat's nest of red tape and regulators is death on small businesses. It's not surprising that governments owned and operated by big corporations pass masses of regulations that eliminated their small-business competitors. Corporations with their in-house legal teams have less problems with regulations than a Mom and Pop company.

Sun, 08/14/2011 - 16:34 | 1559520 Herman Strandsc...
Herman Strandschnecke's picture

You Sir have hit Nail on Head. They probably pay for the lining paint on the streets outside mom & pop's shops too so you can only shop and park in the out of town malls.

Sun, 08/14/2011 - 17:18 | 1559657 luigi
luigi's picture

NO; I already have two cars and a scooter in the family, I can't use a fiat panda for pillow because GDP has to grow. The actula crisis is, among other things a demand crisis; the consumers are stuffed up like Foie-Gras-gooses, you can't stuff more inside them.

The way out of the crisis is to recognize that the system has its limits and to produce what is needed without abusing waterboarding the citizens with stuff to buy, and buy and buy, making wasting money in a patriotic act.

Sun, 08/14/2011 - 15:45 | 1559372 walcott
walcott's picture

the best thing to stop this shit is for everybody to just stop participating.

Quit everything you don't need. Stop buying the myth.

Think Cuba. That will fuck with them. Meaning don't mortgage your future on a new car.

Keep the one you got. Never sign up for a mortgage. 30 years are you kidding me?

Develop yourself physically and your mind too. This fake freakn' reality is a bunch of bullshit.

Throw away the black cube HD TV. What an absolutely mind numbing piece of junk.

Stop going to stadiums for concerts, sports anything. Imagine if everybody stopped watching freakin'

basketball or football? They're paid to keep you distracted. 

Reject that garbage. Don't give it power over you.

Like quitting smoking. Quit that shit.

Its the best thing you can do for yourself.  Let them shift to a new fucking reality.




Sun, 08/14/2011 - 15:55 | 1559403 WestVillageIdiot
WestVillageIdiot's picture

I have a better chance of growing a 3rd ball.

Convince the SNAP crowd not to take their debit card.

Convince the public unions not to demand their "rights".

Convince the sheep not to tune in to American Idol or Dancing With the Stars.

Convince John Q Lunchroom to buy gold and silver.

Yep, I have a better chance of growing a 3rd nut and being elected Corn Dog Queen of the Iowa State Fair.  We all know Bachmann has that one locked up. 

Sun, 08/14/2011 - 15:47 | 1559375 Manthong
Manthong's picture

Oh, to sitting on the balcony of a city view room at the Hilton Cavalieri, sipping a Chianti and watching the Roman festivities.

Sun, 08/14/2011 - 15:56 | 1559383 LetThemEatCake
LetThemEatCake's picture

I read the "Welt" article in the original German, and it is not an attack on the government, and the characterization that the German government will accept Euro-bonds over its dead body is a very simplified view.

The Merkel government is in a coalition of two parties (the CDU and the FDP). The FDP is a liberal party of relatively small government (by German standards), and has been vocal against the transfer union. The CDU is a "popular" (i.e. it tries to target a broad section of the populace), conservative (again, by German standards) party, which had promised no bail-outs, 3% deficit spending for everyone in Europe, a strong Euro and no Euro-bonds, starting with Helmut Kohl. The CDU, so far, has always broken its promises and has plunged in polls. Merkel, in three weeks from now, will agree to Eurobonds, of course contingent of stringent requirements (similar to the original promise that all countries keep a 3% deficit). The FDP *may* put up a fight, which will end the current coalition (if the FDP disagrees in the vote), and requires new elections, which will surely result in massive losses for the CDU, a red-green coalition (SPD and Greens), and likely the FDP being voted out. However, there is a chance that the FDP could win since a sizeable minority of Germans are against bail-outs, Euro-bonds etc, and the FDP could gain on that.

Both SPD and Greens are strongly pro Euro-bonds, and will attack the CDU that they should have allowed Euro-bonds years ago. The majority of Germans will likley come out in favor of Euro-bonds (most of them currently don't care that much about the turmoil yet), unless a strong movement leads to an actual discussion within Germany (similar to tea-party type anger, but don't count on it). The saving grace is - as has been publicly widely reported - that a lot of central bankers have come out against the bonds, bailouts etc., and these people do have a reputation (unlike the heads of private banks, like Ackermann); still carried over from "the good D-Mark times". My guess is that currently 35% of Germans would want to return to D-Mark, and that a bunch more could understand that that would be the cheapest of the available expensive solutions if they thought about it; but that's a guess.

The "Welt" article says that the current government has perhaps changed its mind in favor of Euro-bonds as the least worst solution. It says that such a decision would make Germany more like Greece, but that it's doubtful that it would make Greece more like Germany. It is otherwise pretty even-handed (it's a news article). This news has been reported in a bunch of media outlets, and is not news, since so far the government has always given in to demands by its European partners.

Finally, if the current coalition both agree to Eurobonds, it seems likely that the really right-wing parties (NPD, National Party of Germany, a skin-head/die-hard shop) will make large gains in the next election.

Sorry for the long post. I thought, however, that the original post somewhat misrepresented the original article (it was Google translated, and Google translate is rough for German-English translation and I have certainly seen translations by Google of German that are unclear/misrepresentative).

Sun, 08/14/2011 - 16:09 | 1559442 magpie
magpie's picture

Dear German electorate, i am happy to announce a lesser evil: The EFSF fund will only be increased by a three trillion Euro backstop from you.

Back to Alto Adige to watch the Italians riot.

A. Merkel.

Sun, 08/14/2011 - 16:27 | 1559503 Wolferl
Wolferl's picture

Alto Adige? What´s that? You probably mean South Tyrol. And there are no rioting Italians.

Sun, 08/14/2011 - 16:29 | 1559508 magpie
magpie's picture

I know plausability is in short supply, should read four trillion and partying Italians in Austria.

Sun, 08/14/2011 - 17:43 | 1559721 A Man without Q...
A Man without Qualities's picture

Good analysis.  The problem with almost all German politicians is they seem utterly naive about the ways of their neighbors.  Before you decide that Eurobonds are the least bad option, perhaps you need to find out just how much off balance sheet debts there are, because once you go down this road, you are basically transfering your good credit for someone else's worse, but the magnitude of this cannot be understood until you have a handle on the real debts.

The EU project always was going to lead to a fiscal union, but the steps were, harmonize exchange rates, then interest rates, harmonize deficit levels and keep debt to GDP within a threshold, then you harmonize tax rates, pension systems, welfare etc etc.  So, slowly, without the citizens noticing, you have a full fiscal union, the United States of Europe, and the federalists get their wish.

However, the politicians did not stick to the agreement, they spent too much (don't worry, Germany will bail us out), hid debt (oh, the joys of derivatives and quasi -public enterprises) and gave very little thought how to position their economies to compete in the new global markets (if we built lots of business parks and shiny hospitals, something is sure to turn up)

Anyway, Eurobonds do make sense, but the EU is a million miles from where it needs to be for this to work in the long term.  All that will happen, is the debt ponzi will grow and infect the entire region, leading to anger and recrimination as everyone finds someone else to blame.  


Sun, 08/14/2011 - 15:52 | 1559391 mayhem_korner
mayhem_korner's picture

How does one say 'the streets are going to get greasy' in Italian? BTW, do Italians make better pizza than the Greeks?

P.S. On 0.0 GDP thing, I thought the French only posted those numbers in the Olympics...

Sun, 08/14/2011 - 17:37 | 1559712 JohnG
JohnG's picture

I wouldn't call the pizza better so  much as just different.

Fun Fact: Europe didn't have tomatos until about 1500.  Brought back from N. America.  Natives grew them.

Sun, 08/14/2011 - 16:18 | 1559463 carbonmutant
carbonmutant's picture

I  would be glad to support the Italians by buying more Parmigiano-Reggiano if they lowered the price.

I used some Friday night in a killer garlic beurre blanc...

Sun, 08/14/2011 - 18:44 | 1559924 Bam_Man
Bam_Man's picture

You gotta pay for the good stuff.

Try the Parmigiano-Reggiano with a nice glass of prosecco.

Sun, 08/14/2011 - 16:23 | 1559491 Wolferl
Wolferl's picture

Wow, Tyler, i´m impressed. You actually realize that this is a payed campaign by the Springer press in Germany. Keep up the good work.  

Sun, 08/14/2011 - 16:53 | 1559570 Bob
Bob's picture

300,000 participated yesterday in street protests against severe biflation and deepening income disparity in Tel Aviv.

Sun, 08/14/2011 - 16:53 | 1559580 tom a taxpayer
tom a taxpayer's picture

Reuters article excerpts (below) gives a more skeptical view than AP article.

"Opaque pledges and a lack of detail on measures to speed up deficit reduction plans risk undermining Italy's hopes of winning a reprieve from financial markets that have pushed the country to the brink of crisis."

"So far, few seem to know what the plan will include. Indeed it is unclear if the government itself knows."

"The only real decision is that of bringing forward the balancing of the budget to 2013, but that doesn't seem very credible because 2013 will be an election year," said Tito Boeri, economics professor at Bocconi university in Milan. "They should have brought it forward to 2012, when the impact of the measures announced so far is quite small."

Sound familiar?

Sun, 08/14/2011 - 17:08 | 1559629 Librarian
Librarian's picture

And so it begins, Italian police and gladiators square off outside the arena in Rome trading kicks and punches.

I had hoped that there would have been some Berlusconi and Termonti photo look-alikes that would have been part of the scrum.

The "gladiators" removed by the police were not officially licensed to take money for posing with tourists. The effort was largely symbolic  This untaxed element was fairly easy to locate.  It's unknown how Italian authorities plan to expose a huge shadow economy within Italy.  A few weeks ago, Tremonti was exposed as having paid for an apartment in Rome in cash.  It is extremely unlikely that Tremonti's open tax evasion would lead to any investigation or charges.


Sun, 08/14/2011 - 17:18 | 1559655 tom a taxpayer
tom a taxpayer's picture

Two plainclothes cops are shown in the photo in the gladiator article. Is that a Euro purse each cop is wearing as part of the plainclothes disguise, or is it some type of police paraphernalia?

Sun, 08/14/2011 - 17:09 | 1559633 Cman5000
Cman5000's picture
NATO and Turkey weighing military intervention in Syria War # 7 could be an interesting week ...
Sun, 08/14/2011 - 17:11 | 1559639 topcallingtroll
topcallingtroll's picture

Yep it is all a surprise.

No one could see a kondratiev winter coming.
Not sure even the mighty Ben can stop it.

I love riot cam!

Sun, 08/14/2011 - 17:24 | 1559677 Cman5000
Cman5000's picture

The juggernaut is a rolling ( the bearded one Ben Bankster i can hear the crickets now ) i must sharpen my pitchfork. And let's hope American's will storm the Bastille : ) 

Sun, 08/14/2011 - 17:29 | 1559687 jonjon831983
jonjon831983's picture

Eurobonds, wouldn't that be funny... just spread out the deficits onto everybody so you can have an even long debt party with a bigger hangover... and force more solvent countries to have a share of the shitpie.

Sun, 08/14/2011 - 20:24 | 1560150 StychoKiller
StychoKiller's picture

Tricksy Banksters, they tooks the Precccious!

Sun, 08/14/2011 - 22:45 | 1560425 tom
tom's picture

I believe that "$2.1 trillion" cuts included net zero in FY2012 and net about $20b in FY2013. Which is the equivalent of about 3 billion Euros after adjusting for the US being 5 times bigger than Italy. Italy ran up a lot of debts in its past, but at this point, it's lightyears ahead of the US on fiscal responsibility.

Mon, 08/15/2011 - 08:13 | 1561021 TK7936
TK7936's picture

Sorry ZeroHedge but you got this completly wrong. The Welt Article and also 3 more they posted over the weekend did not in any sense promote the idea of eurobonds, instead they objectivly calulated what they would cost germany. Paymaster = Zahlmeister ist deregetory.  The Article is ANTI BOND but sais that Goverment Insiders say thats the direction beeing taken. This is no secret -the Opposition Leader Gabriel has confirmed on Sunday that he would prefer Euro Bonds to solve the crisis and the Greeens are in that Boat too. The leftist Spiegel is promoting THAT.

Mon, 08/15/2011 - 11:19 | 1561586 Piero
Piero's picture

Piero from Italy  :

we are in very bad water with our 300% Italian Total Debt Private+Public !!

and Usa with 400% ? what happen when the American Rating Agencies/Big Banks will not be able to protect you ?

it's only a question of time.. it's a vicious circle..

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