Italian Barf Bag……..Evil Plan 19.0

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After last week's heroics, I had hoped we could just put this entire Euro mess to rest.  Well, even I am not that gullible, we all know better then that now.  I have a sneaking suspicion that this is not the end of the beginning, but more likely the beginning of the end.  What really disgusted me in all of this, was the way Greek PM Papou was portrayed by the political/media/banking establishment.  He was universally ridiculed as an irresponsible screwball, whom had lost his marbles.  I mean really, how dare he upset their self serving carefully crafted master plans to save the free world.  

Well to BDI, for a moment there, Papou was my hero.  Finally a Statesman was standing up to the international banking cabal which had to date manipulated all other Sovereign heads of State like mere puppets on a string.  For a day or two, it actually seemed like the birthplace of democracy would be granted the right to exercise that democracy in perhaps the most important referendum ever held in the developed world. What was he thinking?  What an outlandish harebrained concept!  Exclaimed the freaked out pundits, running around with their hair on fire…….

In my view, the call for a referendum was a bold & noble move which told the international banking cartel, that the Greek Prime Minister trusts (or fears?) his own people a lot more than those other captured european leaders attempting to impose economic reform on Greece from the outside, and that there would be no  "comprehensive" anything without the blessing of the average Greek citizen.  Oh well, one can dream………much to my chagrin, after some back door arm twisting, and political bribes by the all knowing, all powerful banking/political EU cartel, G-Pap folded like a circus tent, and that was the end of that. 

As per the instructions of the masters of the universe, we are now told, that a "Unity" government will be put in place in Greece, as a place holder, so that their self serving austerity plans can be crammed down the throats of the Greek populous whether they like it or not.  So now we can turn the page on this chapter of the Greek drama, and look forward to the next chapter starring the new Zorba kingpins Samaras & Evangelos, whom I suspect have a few last minute table dances to perform for their jittery, uptight anxious masters….

As chaotic as Greece's resecue effort is, there's a bigger moment in the European sovereign debt crisis looming, just across the Ionian Sea.  So let's place Mykonos on the back burner for a week or two, and move onto the real meat of this post.                                                                                                 


The Italian Barf Bag……………….Evil plan 19.0:Chart


Italian bond yields are approaching imminent danger levels. The ECB says it won't and can't prop up Rome forever. Berlusconi will be gone soon, but the debt will not. In a move that mirrors Athens, the IMF is sending a team to Rome to make sure austerity is pushed through. Italian personal debt is relatively low. It's the public debt that stings: Italy's the world's 4th largest bond market. The spread between 10-year German and Italian bonds is rapidly widening:

Furthermore, a surge in Italian bond yields on Thursday night our time to new euro-era highs signalled growing alarm about Italian President Silvio Berlusconi's failure to push through tough new fiscal measures that the rest of Europe believes are needed if Italy is to avoid a debt crisis of its own.

This reassuring Bloomberg missive from Rome this morning:  Thousands Rally in Rome………..

Thousands Rally in Rome, Pressing Italy’s Berlusconi to Resign Amid Crisis. Tens of thousands of Italians gathered in Rome to call on Prime Minister Silvio Berlusconi to resign, as defections eroded his parliamentary majority at a time when the country’s borrowing costs are at a euro-era high. 

Hundreds of buses and 14 special trains brought thousands of supporters of the opposition Democratic Party to the rally in front of the Basilica of St. John Lateran to hear calls for the premier to go. Demonstrators shouted “Shame”” and “Get Out” in the square that’s home to the first church built in Rome.

The premier, who generally spends his weekends at his home in Milan, remained in Rome in consultation with his top advisers after several lawmakers said they planned to abandon his People of Liberty party, threatening to leave him without a majority in Parliament before a key vote. Calls will increase for Berlusconi to resign if he loses the ballot to rubberstamp the 2010 budget report, likely to be held on Nov. 8.

And the piece de resistance from Reuters:   ECB debates ending Italy bond buys if reforms don't come

If we observe that our interventions are undermined by a lack of efforts by national governments then we have to pose ourselves the problem of the incentive effect,” Mersch said according to extracts of an interview with Italian daily La Stampa to be published on Sunday.  Asked if this meant the ECB would stop buying Italy’s bonds if it did not adopt reforms it has promised to the European Union, Mersch, who heads Luxembourg’s central bank, replied:

 " If the ECB board reaches the conclusion that the conditions that led it to take a decision no longer exist, it is free to change that decision at any moment. We discuss this all the time."

Since the ECB resumed its bond buying programme (SMP) around three months ago it has purchased some 100 billion euros of government bonds, a majority of which are thought to be Italian BTPs.

Mersch said the ECB did not want to become a lender of last resort to help the euro zone solve its debt crisis and said it was concerned that its job could be made more difficult by governments that “don’t meet their responsibilities.”

“Our job is not to remedy the errors of politicians,” he said. 

The central bank's new president, Mario Draghi, said that it was ''pointless to think that sovereign bond rates can stably be brought down for a protracted period by outside intervention … the first and foremost responsibility lies with national economic policies. Put your public finances in order."

The markets know that Draghi is right. Central bank debt market and bond market buying operations might buy countries time, but they are not a long-term cure for the economic weakness that drives a sustained bond market attack.


So you see my little Slope-a-dopes, we are out of the frying pan directly into the fire.  As Rome burns, It is only a matter of time now for Berlusconi to puke up his sins and repent if he wants to avoid the damnation of hell on earth.  Evil Plan 19.0 is being crafted at the Vatican………….Don't forget your white ski suit!

          BDI SOH's Idiot Savant