Whoever says there are no winners in the European banking crisis apparently has never woken up with a horse's head in their bed. According to a new report by Italian anti-crime group SOS Impresa, as reported by Reuters [9], "Organised crime has tightened its grip on the Italian economy during the economic crisis, making the Mafia the country's biggest "bank" and squeezing the life out of thousands of small firms, according to a report on Tuesday." You mean kinda like Intesa credit cards demanding a 39.95% APR: we knew we had seen that "life squeezing" thing before somewhere. Of course at least with the mafia you know that it will never rely on fake Libor fixings to pretend it is alive, or need an ECB bailout the next day due to being overly invested in US subprime mortgages (unless of course Goldman's rolodex stretches even further than we thought possible). It sure does, however, bring a new definition to the term "shadow banking"... or is that the old one, where nobody cared about repos, money markets, overnight drafts, and hyperrehypothecation and all the complexity could be explained away with a baseball bat. Yet the conclusion, no matter how defined, still strikes us as hilarious: '"With 65 billion euros in liquidity, the Mafia is Italy's number one bank," said a statement from the group, which was set up in Palermo a decade ago to oppose extortion rackets against small business." Because as we pointed out yesterday [10], it was companies which were responsible for bailing out banks in Europe. How long then until La Cosa Nostra provides a lifeline to UniCredit, but only if half the BOD is replaced with guys in tracksuits and buzzcuts? Actually, not too long we would wager...
From Reuters [11]:
Organised crime groups like the Sicilian Cosa Nostra, the Naples Camorra or the Calabrian 'Ndrangheta have long had a stranglehold on the Italian economy, generating profits equivalent to about 7 percent of national output.
Extortionate lending had become an increasingly sophisticated and lucrative source of income, alongside drug trafficking, arms smuggling, prostitution, gambling and racketeering, the report said.
"The classic neighbourhood or street loan shark is on the way out, giving way to organised loan-sharking that is well connected with professional circles and operates with the connivance of high-level professionals," the report said.
It estimated about 200,000 businesses were tied to extortionate lenders and tens of thousands of jobs had been lost as a result.
Extortion - new vs old school:
Old style gangsters handing out cash in bars and pool halls had been replaced by apparently respectable bankers, lawyers or notaries, the report said.
"This is extortion with a clean face," it added. "Through their professions, they know the mechanisms of the legal credit market and they often know the financial position of their victims perfectly."
Small businesses, who have struggled to get hold of credit during the economic slowdown, may have been increasingly tempted to turn to the mafia, said the report.
Typical victims of extortionate lending were middle-aged shopkeepers and small businessmen who would struggle to find a new job and who were ready to try anything to avoid bankruptcy, it added.
"They are usually people in traditional retail sectors like food, greengrocers, clothes or shoe shops, florists or furniture shops. These are the categories which, more than any other, are paying the price of the (economic) crisis," it said.
Next up: a surge in prostitution, drugs, xenophobia, child labor, and all those great things that Italy thought it had managed to get away from, and which supposedly were no longer the mark of modern "civilized" society. Guess what - they never really left, they were merely on layaway. Only now, the country will be faked-ruled by insolvent banks with Frankfurt HQs, and completely ruled by the mob. And in keeping with the deja vu, how long we wonder until Italy just says no to the currency pseudo-democratic political system and reverts to the one last seen making an appearance some 70 years earlier?