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.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
falak pema's picture

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

slaughterer's picture

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

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..

cossack55's picture

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

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! :-)

cossack55's picture

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

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.  

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."


Caviar Emptor's picture

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

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.


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.

vast-dom's picture can smoke crack on credit........for only so long tho.

zorba THE GREEK's picture

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

snowball777's picture

Moustache: necessary, but not sufficient.


GCT's picture

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

TwelfthVulture's picture

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

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

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.


Caviar Emptor's picture

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

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...

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.

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. 

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. 

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.


Seasmoke's picture

The Vatican must be very nervous

falak pema's picture

they have more money than Warren Buffet.

snowball777's picture

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

Cast Iron Skillet's picture

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

Oh regional Indian's picture

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


Cognitive Dissonance's picture

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

Caviar Emptor's picture

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

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.

speconomist's picture

Hungary is not part of the Eurozone.

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.

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.

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)

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.

Nozza's picture

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


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...

zorba THE GREEK's picture

"Of course, nobody saw it coming"

I saw it coming.

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?

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.

johnQpublic's picture

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

zorba THE GREEK's picture

"not bringing your accordian deerhunting"   LOL

Licio Gelli's picture

General strikes in Italy are a dime a dozen

snowball777's picture

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


magpie's picture

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