Reality Strikes As Italy Slashes Economic Growth, Hikes Deficit Forecast

Tyler Durden's picture

For all those who thought the smooth-talking, avuncular Goldman operative Mario Monti would never lie when he said "Italy is fine", we have some bad news. He did:

  • *ITALY REVISES 2012 GDP TO -2.4% FROM -1.2%
  • *ITALY SEES 2012 DEBT AT 126.4% OF GDP, 2013 DEBT AT 127.1%


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SeverinSlade's picture

Hope that "unlimited" OMT has enough capacity to bail out Italy, Spain, Greece, Portugal, and eventually France, Germany, etc.

The ECB should've done a stealth bailout of Italy by moving their HQ to Italy and paying Italians to build their new facility.  With how much Italian companies are forced to overcharge due to regulations, they probably would've managed to balance the budget for this year.

CrashisOptimistic's picture

Dood, wake up.  Mario Draghi HAS NOT BOUGHT A SINGLE BOND from his plan.

It's all jawboning.  NOTHING HAS BEEN ACTUALLY DONE, probably because the Germans made a deal:

"You can claim you're going to do all these things, and we'll say supportive things, but under NO CIRCUMSTANCES are you allowed to actually do any of them."

That got Spanish yields under 6%.  When someone calls his bluff and he can't buy any bonds, it will all disintegrate.

economics9698's picture

Time for the inflation magic fairy to show up.

Real deficit = Nominal deficit - (inflation rate x total deficit)



Urban Redneck's picture

Then Mario calls in reinforcements from TBTF, who lean on Uncle Ben to prop up the ponzi a little longer.

ShrNfr's picture

Hey, but look at the upside. Our deficit will only be 6.8% of the GDP in the coming FY.

ShrNfr's picture

Hey, but look at the upside. Our deficit will only be 6.8% of the GDP in the coming FY.

THE DORK OF CORK's picture

Monti is a good German - he has done his Job of keeping the German economic oil tank full - this waste is then expressed in German GDP growth....

GDP is a truly terrible economic metric.

It is the waste needed to pay interest on Sov debt without costly political tension     He is also very popular in France......  

SAT 800's picture

You're a very thoughtful person. And you think about political realities. I look forward to your posts. Monti is a good german; yeah, that brings a smile to my face. After WW11, a lot of "good Germans" were simply liars. But then, that's no dis-qualification, is it.

SAT 800's picture

costly political tension;" Yeah; well, it's sure cheaper than using Poland for a Chessboard to play with Tanks.

Navymugsy's picture

Hey, let's stop joking around! Nobody could have ever seen this coming!


jal's picture

A report came out that the Canadians spent $11M in hotel rents while helping the Lybians.

Now, the Canadians are gone things are going to get worst.

StockHut's picture

Need. More. Inflation.

Dick Darlington's picture

Solid investment grade, lol

vote_libertarian_party's picture

"We don't need any bailout from the ECB to buy our bonds....D'OOHHHH!!!!"

Anasteus's picture

Fortunately, Mario Draghi is Italian.

RSloane's picture

He also worked for Goldman Sachs.

Anasteus's picture

Yes, an explosive mixture.

Kaiser Sousa's picture

Don Carleone: "and tell Luca Brazi i said come here....."

CrashisOptimistic's picture

Argentina is about to be kicked out of the IMF for lying about their economic statistics.

I suppose we all do realize about half of Europe should be kicked out, too?

Has anyone noticed that no one has a plan to fix these numbers?  Celebrations are convened when there is announcement that they will borrow more money, or more specifically, that someone is willing to lend them more money and deepen their hole.  But a plan to fix it?  Nada.

They are all stuck in the Old Normal of thinking that they can grow their way out.  They cannot envision the reality that they are past the tipping point and growing will never get them out.

Instead, the goal is keep the juggled balls in the air, wait for a natural disaster to occur, and then they can blame all the evaporation of people on the disaster rather than themselves.

LULZBank's picture

People love it and cant have enough.

Argentina a lot of other things that the EU did'nt ;)

Nothing To See Here's picture

This thing is all living on hope, and there is still plenty to be sold, although peak hope could be near now. But expect a tsunami of hope in the coming 45 days with the Obummer campaining on big nothings. This guy is better at selling hope than the Mexican lords are at selling coke.

earleflorida's picture

Au contraire my friend... Obamacare has a gubermint plan in the works to facilitate the 'Private Medicinal Marijuana Program' into a facsimile ?GSE?  [eg. private prison systems, etc.,]... where medicare will pick up the tab for your bong'spuff !

sayin it ain't so...

pashley1411's picture

I'm just waiting for the bond vigilantes to ring the bell for "last call".

CrashisOptimistic's picture

For a time that seemed likely and possible both.

But then it became clear that HFT is almost the majority of bond trading volume.

The vigilante reality was far too obvious.  The governments will not allow ANYTHING to stop their juggling of balls in the air.  If a vigilante shows up with size sufficient to undo HFT, he'll be killed.

We'll never hear about it.

Sofa King Confused's picture

Argentina is about to be kicked out of the IMF for lying about their economic statistics.

Congratulations you are now free!

Arnold Ziffel's picture

<< Argentina is about to be kicked out of the IMF for lying about their economic statistics. >>


If they kick out all countries that 'lie' about their stats (i.e., apply that policy equally), no country would be left, would they?

Jena's picture

Well, if it works for Argentina, then it will certainly work for the U.S.  So that's the plan, is it Ben?

THE DORK OF CORK's picture

The IEA diesel consumption in Italy pointed in this direction for some time now - its not a surprise.

(diesel is the oil stuff which does the work)

PS also the Italian private car market is turning Greek.

The Drop in Greek car regs just gets bigger & bigger. (ACEA)
Jan – Aug 07 : 208,921
Jan -Aug 11 : 72,513
Jan – Aug 12 est : 42,072
One fifth of credit boom sales now.

Astounding either with or without a devaluation but those guys must have no tokens for domestic commerce.
The very big market of Italy could obviously become the next Greece with huge consequences for zee Germans.(what are the Current Volks ,Merc ,BMW sales in Italy , or is it all Polish Fiat 500s ?)
Jan -Aug 07 : 1,741,322
Jan -Aug 11 : 1,224,096
Jan – Aug 12est : 981,030….. a bit over half of credit bubble peak

Spain is a bit further along this path
Jan -Aug 07 : 1,119,050
Jan – Aug 11 : 568,349
Jan – Aug 12est : 520,216……just under half of credit bubble peak. (flat lining ?)

Spain would probally benefit most from a return to a domestic currency given its previous massive internal rail investments with for example 3 million+ people still using the Barcelona to Madrid plane shuttle in 2010 despite the presence of a high speed rail connection since 2008.
There is still a few Gems remaining in Spain (although not many)
A Christmas spent in Seville looks nice.

Its Germany that is in trouble – In Germany YOU NEED Gas / oil central heating(currently 400KBD) ,Seville not so much although the culture of Siesta needs to be brought back for the summer months as air conditioning will be prohibitively expensive under the Spanish Peseta with only the rich affording airconditioning courtesy of

Cannot really understand why the Spainish & Italian do not default…..they are dead ducks withen the Euro.
Same political culture as Ireland I suspect , the guys on top have too much to lose.

magpie's picture

Hey D of C, i've been following your posts for a while. What country in the Eurozone is even close to viable according to your energy consumption/import model ?

THE DORK OF CORK's picture

Well - they will never become energy secure but they can become semi viable only when they leave the Eurozone and become nations again rather then the post 1987 Europe of Extreme Market states.

The money  / energy construct then works over shorter distances using surplus energy to feed domestic demand and investment rather then sustaining ultra long distance commerce and international banking energy / labour arbitrage operations.

The more countries go along the national road the less energy leakages.......for example despite the depression in Ireland aviation burns 3 times as much Kerosene as it did in 1990 despite slightly better engines.......this extracts from domestic demand.....

The domestic demand & fixed capital investment figures were published today in Ireland and they are quite horrible.......GDP is fine though.....

Total Irish domestic demand (current)

Y2007 Q1 : 43,003 Million

Y2007 Q2 : 42,115 Milllion 


Y2012 Q1 : 30 ,915 million

Y2012 Q2 : 29,947 million

Don't be fooled by the banking spin in Ireland..(we are their best pupil)


 Economic Adjustment Programme for Ireland — Summer 2012 ...

In the above report they at least openly stated that they must take money from people so as to make private banks profitable. (think about that for a second ...... if so what is the function of private banks ?)

This is the extreme rentier dynamics that Micheal Hudson talks about.

There is no role for credit banks in a energy starved world - they can only function as parasites which is their natural gift.

FIAT FIAT FIAT and I am not talking about the Fiat 500 which is Polish made now.

The non national Euro experiment means we must export to countries where malinvestment is currently occuring  so as to pay off previously malinvested debt...eventually when Germany is destroyed via migration following footlose capital & subsequent malinvestmet the capital will move back into previously broken countries ... and the cycle repeats......downwards into a entropy pit.

Its a entropy cycle - bank credit money only lives to run down existing social  energy systems.

A global cul de sac.

Given that domestic customers  are so much closer then external markets the energy lost from these pointless exports is huge.

This could otherwise be used to sustain domestic demand and rational investment.

Countries need to renationalise their money systems.

The last time total quarterly domestic demand was in the 29,000s was in the Year 2003

Back then stuff was a bit cheaper I gather and the population of the Irish state was far lower at 3.979 million rather then 4.484 million of 2011.


Italian Diesel consumption  
SAT 800's picture

What do you do for a living? If I was running a hedge fund in Europe I'd definetely want to interview you as a portfolio manager. Reality is a bitch; but it's all we got. The Aircraft Fuel usuage is symptomatic of the inflationary period we just lived through; Now, in the new normal, it looks in-correct to do so much long range shipping; then, it was "okay".

THE DORK OF CORK's picture


I work for Chet Raymo ..... I am a character in one of his books so I find it impossible to leave the two-dimensional  world of the page.............

SAT 800's picture

Have you read the book, "The Tradgedy of the Euro"; the subject matter includes it's birth and how and why it was created. It's actually available on line to read for free; I believe it's in the library at www. The purpose of the Euro was to prevent the periodic de-valuations of the French Franc vis a vis the German Mark; to avoid embarrassment for the French Socialists and attacks by the market; it was forced on Germany by blackmail; their Chancellor at the time had to faithfully promise to go along with the joke in order to secure permission from France, UK, USA, to re-unite and become one country again; being Germans they actually did their duty and kept their promise. Most of the German population is completely mystified as to why their "leaders" ever got into this in the first place. The financial machinery behind the Euro looks like an alarm clock built by an eight year old; it's missing a couple of gears.

THE DORK OF CORK's picture


The purpose of the euro was to replace the concept of the nation state (also a product of banking) with the lowest level of hell - the market state.


 The Shield of Achilles: War, Peace and the Course of History

 (2002) Philip Bobbitt

History is repeating itself - the Venetian banking system wishes to destroy.


SAT 800's picture

I think we can safely say there is a dis-connect between the "leaders" and the population. As long they can manage with "spin"; they will; civil wars are so messy.

americanspirit's picture

Economic growth? Italy? Really? And then there's Spain. Really? Oh, and then there's the US. No shit - really? And, pardon me - China. Really?

poor fella's picture

We're barrelling down a tunnel we should have exited LONG ago. Instead of slowing down, we've accelerated, into the void, hoping for daylight, and everyone is along for the 'ride'.

"To Ludicrous Speed!!!"

surf0766's picture

How was your vacation good?  Glad to hear it.

Global collapse....

q99x2's picture

Yep soon as someone offers money; wouldn't you know it; they need twice as much. Banksters what loathsome creatures.

timbo_em's picture

So the Italian hockey stick was finally crushed by reality. Time to re-apply that hockey stick starting 2014. I expect them to expect at least a 2.0 percent GDP growth in 2014. After all in 2010 Greece was expected to grow by 2.1 percent this year.

luckylongshot's picture

The Titanic is also fine.

SAT 800's picture

Well, you could say that; yes. It's certainly in no danger of sinking.

poor fella's picture


Quick! Send Goldman's crack team of can-kicker profiteers!!!!! There's still a few American tax-payers ready to take it to save the global financial system, otherwise, just CHARGE IT!