ITALY DEBT IN FOCUS - Bad Loans, Bad Bank

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Offline Dig

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ITALY DEBT IN FOCUS - Bad Loans, Bad Bank
« on: December 22, 2010, 09:29:15 PM »
Bank of America, Deutsche Bank Assets Seized in Italian Derivatives Probe
http://www.bloomberg.com/news/2010-12-21/bank-of-america-deutsche-bank-assets-seized-in-italy-derivates-sale-probe.html
By Elisa Martinuzzi - Tue Dec 21 12:52:34 GMT 2010
 

Italy's finance police said they took 15 million euros from Bank of America. Photographer: Andrew Harrer/Bloomberg

Italy’s finance police seized 22 million euros ($29 million) from six lenders including Bank of America Corp. amid allegations of fraud in a probe focusing on the sale of derivatives to five municipalities in central Italy.

Police said they took 15 million euros from Bank of America, and 1.7 million euros each from Deutsche Bank AG and UBS AG, according to an e-mailed statement. The remainder was seized from Natixis SA, Dexia Crediop SpA and Banca Monte Paschi di Siena SpA.

The amount represents the alleged illicit profit the banks made from selling derivatives to the city of Florence, the region of Tuscany and three other municipalities in the region, the police said. The local governments have lost about 123 million euros on the swaps that adjusted payments on 1.4 billion euros of debt, the police said.

Losses on derivatives from Puglia, on the heel of Italy, to Liguria, the region that borders France along the Mediterranean, are prompting local governments to review their arrangements, while lawmakers have proposed rules that limit the use of swaps. Four banks are on trial in Milan for alleged fraud in the sale of derivatives to the city.
All eyes are opened, or opening, to the rights of man. The general spread of the light of science has already laid open to every view the palpable truth, that the mass of mankind has not been born with saddles on their backs, nor a favored few booted and spurred, ready to ride them legitimately

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Re: Bank of America, Deutsche Bank Assets Seized in Italian Derivatives Probe
« Reply #1 on: December 23, 2010, 12:53:12 AM »
and you can hear a pin drop in BoA HQ...

Offline Letsbereal

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Italy's debt costs approach red zone
« Reply #2 on: December 30, 2010, 03:15:41 PM »
Italy's debt costs approach red zone
29 December 2010
, by Ambrose Evans-Pritchard (The Telegraph)
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8230413/Italys-debt-costs-approach-red-zone.html

Excerpt:

Italy's borrowing costs have jumped to the highest level since the financial crisis over two years ago, raising concerns that Europe's biggest debtor may slip from the eurozone's stable core into the high-risk group on the periphery.

Yields on 10-year bonds rose 10 basis points to 4.86% after a poor auction of short-term debt in Rome. The Italian treasury had to pay 1.7% to sell €8.5bn (£7.2bn) of six-month bills in a thin post-Christmas market, up from 1.48% a month ago.

The spike in rates came as money supply data released by the European Central Bank showed that real M1 deposits have collapsed at a rate of 2.8% over the last six months in the EMU bloc of Italy, Spain, Greece, Ireland and Portugal, even though they are rising in northern Europe.

"This is comparable with the decline in early 2008 just ahead of the plunge into recession," said Simon Ward from Henderson Global Investors. "The eurozone periphery is locked into a 'double dip' that will undermine fiscal consolidation."

Italy's M1 contraction began later than elsewhere in southern Europe but is now accelerating. M1 typically gives advance warning of economic shifts by six to nine months.

---

German Chancellor Angela Merkel vetoed the creation of eurobonds or any serious move towards fiscal union, and shot down calls for an increase in the eurozone's €440bn emergency loan fund. The ECB has so far refused to step in to the breach with overwhelming action.

Willem Buiter, Citigroup's chief economist, said the response had been "woefully inadequate", raising the risk of fresh bank failures and a wave of sovereign defaults next year. He said the EU authorities may need a mix of measures worth up to €2 trillion to stop the rot.

Italy avoided the sort of property bubble seen in Spain or Ireland and has kept a tight rein on public spending under finance minister Giulio Tremonti. However, the rise in yields looks ominously like the pattern seen in Greece, Ireland, Portugal and Spain when they first began to lose easy access to the capital markets.

Neil Mellor, currency strategist at the Bank of New York Mellon, said big institutional investors have been pulling funds out of Italy and rotating into German debt on a large scale. "Our flow data shows that the trend has been just as concerted out of Italian debt as it has been out of Irish or Greek debt. Italy should be able to weather 2011 in good shape but the government's debt dynamics are very poor," he said.

Italy is too big to be rescued by a diminishing group of creditor states in the EMU core, should it ever need help. Public debt will creep up to 120% of GDP next year – or over €1.9 trillion – a level widely seen as the outer limit of debt sustainability.

The country's trump card is a high savings rate and low private debt. Total debt is 245% of GDP, below the eurozone average, and much lower than in Spain, Britain, the US or Japan. This may be the relevant indicator for an economy as a whole.

However, low private debt may equally reflect deep pessimism in a country where growth has been glacial for a decade, productivity has fallen since 1995, and global export share is in steep decline.
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Offline Letsbereal

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Here's Why Italy's CDS Are The Biggest Risk For The Eurozone
« Reply #3 on: July 08, 2011, 07:01:59 PM »
Here's Why Italy's CDS Are The Biggest Risk For The Eurozone
8 July 2011
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/article/heres-why-italys-cds-are-biggest-risk-eurozone

Excerpt:

Much hollow rhetoric has been uttered about the vast existential threat presented by Greek CDS. As we have reported, Greek CDS is the least of Europe's problems.

When it comes to the stability of the European dominoes, it is and has always been about Italy, which is not only the second worst country in Europe after Greece on a debt/GDP basis, and also the country with the largest amount of nominal debt,

but more importantly has the largest amount of net CDS outstanding.

All this is summarized on the Bloomberg chart below:



----

Bottom line: the Italian CDS is not so much an aggregator of risk, as a beacon of where investors think risk will emanate from next. Although, to be fully objective, the biggest surge in recent months in net notional has not been at Italy, nor Spain, nor any of the other PIIGS, but.. France.

----

There is, however, one country that is missing from the Y/Y surge comparison.The United States of America.


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Offline Letsbereal

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Italian Banks Face Higher Borrowing Costs as Debt Crisis Enters New Phase
14 July 2011
, by Elisa Martinuzzi and Charles Penty (Bloomberg)
http://www.bloomberg.com/news/2011-07-13/italian-banks-face-funding-squeeze-as-crisis-enters-new-phase.html

Excerpt:

Italian banks, saddled with the nation’s record borrowing costs, may struggle to reverse a drop in profitability that’s already turned UniCredit SpA (UCG) and Intesa Sanpaolo SpA (ISP) into European laggards.

Italy’s two biggest lenders have about 55.4 billion euros ($78.4 billion) of debt maturing in 2012, according to the banks. Investor concern that the sovereign debt crisis is spilling over to Italy, which has the region’s largest debt, pushed the country’s 10-year bond yields to their highest relative to German bunds since the introduction of the euro, adding about 1 percentage point to funding costs this month.

The crisis has entered a new phase and higher financing costs for some European nations are here to stay, Bank of Italy Governor Mario Draghi said yesterday. For the banks, that translates into pressure on earnings and may force cost cutting, greater competition for deposits and a contraction in lending, mirroring the challenges Spanish lenders are also facing.

“The widening of sovereign spreads is so critical for southern European banks,” Morgan Stanley analyst Huw van Steenis wrote in a note to clients July 12. “Deleveraging remains the base case for those banks with high funding costs and impacts bank earnings and is a drag on economies.”
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Offline Letsbereal

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Deutsche Bank Cut 88% of Italian Government Debt Exposure - 70% PIIGS
« Reply #5 on: July 27, 2011, 12:33:19 AM »
Deutsche Bank hedges Italian risk
26 July 2011
, by Richard Milne in London and James Wilson in Frankfurt (Reuters)
http://www.ft.com/intl/cms/s/0/09df8530-b7a4-11e0-8523-00144feabdc0.html

Excerpt:

Deutsche Bank cut its net exposure to Italian government debt by 88% in the first six months of the year in a dramatic sign of international investors backing away from the eurozone’s third-largest economy.

Germany’s biggest lender disclosed with its second-quarter results that it had cut its net Italian sovereign exposure from €8bn at the end of 2010 to €997m by the start of July.

Its overall exposure to what it called the “PIIGS” – Portugal, Ireland, Italy, Greece and Spain – fell 70% to €3.7bn over the same period.

Stefan Krause, Deutsche’s chief financial officer, linked the dramatic reduction in Italy to the first-time consolidation in December of Postbank, a German retail bank that had large Italian holdings.

He added that Deutsche had bought credit default swaps – a form of insurance for investors – to hedge its Italian exposure in its trading book.
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Offline Letsbereal

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Cost of insuring against Italian default hits record
« Reply #6 on: August 11, 2011, 08:34:23 AM »
Cost of insuring against Italian default hits record
11 August 2011
, (The Telegraph)
http://www.telegraph.co.uk/finance/financialcrisis/8695447/Cost-of-insuring-against-Italian-default-hits-record.html

The cost of insuring Italian government bonds against default hit a record high and country's stock market fell again as politicians raised doubts about Prime Minister Silvio Berlusconi's new austerity plan.
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Offline Letsbereal

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ECB Purchases €22 Billion Of Italian, Spanish Bonds In Past Week, Highest Weekly Amount Ever
15 August 2011
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/ecb-purchases-%E2%82%AC22-billion-italian-spanish-bonds-past-week-highest-weekly-amount-ever

Excerpt:

The ECB just disclosed its much anticipated weekly purchases under the SMP (or direct monetization) program, which at €22 billion came well above expectations of €15 billion, and represents the biggest weekly total in the 66 weeks of purchases under the program, more than the previous record €16.5 billion purchased in the inaugural week of the SMP.

Furthermore, as has been disclosed before on Zero Hedge, with a regular (T+3) settlement on SMP purchases, this means that the full weekly total will not be clear until next week's number is announced, and the presented number is only indicative of the pre-settled purchases of Italian and Spanish bonds.

As before, what happens under the SMP is irrelevant (although is occurring as predicted by Zero Hedge back in November, when we said the SMP total is about to double as the crisis spreads) since the only thing that matters is when and how big the EFSF will become.

Continuing monetizations at this rate under the SMP is political suicide (because make no mistake: the ECB is nothing but a political player now) for JC Trichet and his Italian soon to be replacement.

We can't wait to hear Germany's reaction to the fact that cumulative SMP purchases (and thus "Weimar" risk) increased by 30% in one week.
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Offline Letsbereal

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Greece’s Notes Slide on Collateral Demands; ECB Purchases Italian Bonds
« Reply #8 on: August 19, 2011, 10:57:02 AM »
Greece’s Notes Slide on Collateral Demands; ECB Purchases Italian Bonds
19 August 2011
, by Alena Chechel, Scott Rose and Jack Jordan (Bloomberg)
http://www.bloomberg.com/news/2011-08-18/putin-slams-u-s-parasite-after-1-600-jump-in-russia-holdings.html

Excerpt:

For Russian Prime Minister Vladimir Putin, the U.S. is a “parasite” because its rising debt weighs on the global economy. For his government, the same debt is the safest possible investment.

Russia, the world’s largest energy producer, has boosted its holdings of U.S. debt by more than 1,600 percent since September 2006, according to U.S. Treasury Department data. Russia used surging commodity prices to build the world’s third- largest reserves pile, boosted in part by return on Treasuries.

Putin, 58, who oversaw the largest buildup of U.S. debt holdings in Russia’s history as president from 2000 to 2008, may return to the post after elections next year. The country is now one of the world’s 10 largest holders of the securities with $110 billion at the end of June, about 70 percent more than when Putin left the Kremlin.

“They are sending out a message” largely for domestic consumption, Edwin Gutierrez, who helps manage about $7 billion in emerging-market debt at Aberdeen Asset Management in London, said in a phone interview on Aug. 17. “It’s ironic that these voices of complaint come as they experience massive capital appreciation.”

Russia’s 2020 dollar bonds returned 9.5 percent this year compared with 12.7 percent for similar-maturity U.S. debt. This month, the Russian dollar bonds advanced 0.7 percent against a 5.6 percent increase for U.S. bonds. Ten-year Treasury yields dropped below two percent for the first time yesterday, touching a record-low 1.9735 percent before rising again.
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Offline Letsbereal

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Italy’s Debt Burden May Balloon as Austerity Smothers Growth: Euro Credit
« Reply #9 on: August 22, 2011, 12:34:05 PM »
Italy’s Debt Burden May Balloon as Austerity Smothers Growth: Euro Credit
22 August 2011
, by Jeffrey Donovan (Bloomberg)
http://www.bloomberg.com/news/2011-08-21/italy-s-debt-burden-may-balloon-as-austerity-smothers-growth-euro-credit.html

Excerpt:

Italy’s austerity drive, enacted in exchange for European Central Bank bond purchases driving down borrowing costs, may backfire as it chokes the economic growth needed to ease Europe’s second-biggest debt burden.

Prime Minister Silvio Berlusconi’s Cabinet approved 45.5 billion euros ($66 billion) in deficit reductions in Rome on Aug. 12, the nation’s second austerity package in a month, to balance the budget in 2013 and convince investors that Italy can trim debt of about 120 percent of gross domestic product. That’s the biggest ratio in Europe after Greece, whose fiscal woes sparked the sovereign crisis last year.

While the back-to-back packages aim to eliminate Italy’s budget gap, spending cuts and tax increases risk damaging the economy at a time when the global recovery is stumbling. The measures, already in effect, require parliamentary approval that starts today as Senate committees review the law before both houses vote in September.

“There are clear downside risks to growth emanating from such a sharp fiscal tightening profile, which could tip Italy’s fragile economy into a recession,” said Vladimir Pillonca, an economist at Societe Generale SA in London. That could “weaken revenue growth and undermine the ongoing fiscal adjustment” in the face of other challenges, such as “shocks to risk premiums and/or interest rates.”
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Offline Letsbereal

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ECB buying to help Italy 10-yr yield dip at auction
« Reply #10 on: August 29, 2011, 11:54:06 PM »
ECB buying to help Italy 10-yr yield dip at auction
30 August 2011
, by Valentina Za - Milan (Reuters)
http://www.reuters.com/article/2011/08/29/italy-bonds-auction-idUSLDE77S08Y20110829

Excerpt:

* Italy sells 6-8 bln euros of 3-, 7- and 10-year debt

* Yields seen falling from end-July due to ECB support

* 10-year yield seen at around 5.20% from 5.77%


Italy's borrowing costs are set to fall at a debt sale on Tuesday with its benchmark 10-year yield seen at around 5.20% thanks to support from the European Central Bank, after hitting an 11-year high in July.

The ECB started buying Italian and Spanish government bonds on the secondary market on Aug. 8 to ringfence the euro zone's third- and fourth-largest economies from a spreading debt crisis in the bloc.

Italy paid 5.77% to sell 10-year paper at the end of July, the highest in 11 years and up more than 80 basis points from a month earlier.

Investors' worries about Italy's ability to repay its 1.9 trillion euro debt further pushed the 10-year yield to around 6.4% on the secondary market in early August before the ECB stepped in, pushing yields back towards the 5% level.

Italy cancelled a mid-August long-term bond sale, so Tuesday's BTP auction is the first since the ECB began buying Italian bonds.
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Offline Letsbereal

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Italy Cuts Tax on High Earners From Austerity Package
« Reply #11 on: September 04, 2011, 09:37:08 AM »
Italy Cuts Tax on High Earners From Austerity Package
29 August 2011
, (Reuters - CNBC)
http://www.cnbc.com/id/44317661/

The Italian government backtracked on parts of its widely criticized austerity package on Monday, scrapping a tax on high earners and scaling back cuts to local authority funding.
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Offline Letsbereal

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Italy’s borrowing costs rise as demand falls
« Reply #12 on: September 13, 2011, 09:20:44 AM »
Italy’s borrowing costs rise as demand falls
13 September 2011
, by Simon Kennedy - London (MarketWatch)
http://www.marketwatch.com/story/italys-borrowing-costs-rise-as-demand-falls-2011-09-13

Italy sold 3.9 billion euros ($5.3 billion) of five-year bonds Tuesday as borrowing costs rose and demand for the debt shrank.
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Offline Letsbereal

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Re: Italy’s borrowing costs rise as demand falls
« Reply #13 on: September 13, 2011, 11:03:24 AM »
Italy Seeks $10B as Contagion Slams Demand
13 September 2011
, by Lorenzo Totaro and Anchalee Worrachate (Bloomberg)
http://www.bloomberg.com/news/2011-09-12/italy-seeks-10b-as-contagion-slams-demand.html

– Italy has a a debt of 1.9 trillion euros — more than Spain, Greece, Ireland and Portugal combined

- Italian yields are at their highest since the European Central Bank started buying Italian bonds on Aug. 8

- While Italy has completed more than 70% of its debt financing this year, it still needs to sell about 70 billion euros of bonds by year-end to cover its budget deficit and other redemptions.

- The yield on Greece’s two-year note yesterday surged to almost 70%, while the cost of insuring Greek, French, Spanish and Italian debt against default all rose to records

- Papandreou’s latest offer of increased austerity is failing to convince investors the country can meet its fiscal targets and avoid default
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Offline Letsbereal

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The ECB bought Italian government bonds today
« Reply #14 on: September 14, 2011, 07:00:07 AM »
Italian Government Bonds Rise as ECB Buys; Germany Auctions Two-Year Notes
14 September 2011
, by Keith Jenkins and Emma Charlton (Bloomberg)
http://www.bloomberg.com/news/2011-09-14/german-bunds-advance-after-moody-s-downgrades-two-french-banks.html

Excerpt:

Italian government bonds rose, snapping a four-day decline, as the European Central Bank was said to buy the debt in a bid to avert contagion from the region’s debt crisis.

German two-year notes fell for a third day as the nation sold 4.1 billion euros ($5.6 billion) of the securities.

The yields dropped to a record low earlier this week on concern Greece will default.

Spain’s bonds advanced amid speculation the ECB will buy more of the securities after it started purchasing Italian and Spanish debt on Aug. 8. Italian 10-year yields earlier climbed to 5.77%, the highest since Aug. 5.

We’ve seen quite a worrying increase in Italian yields in the past few weeks and that means the volumes that the ECB will have to purchase is increasing,” said Michael Leister, a fixed- income strategist at WestLB AG in London.

The ECB doesn’t seem to be willing to buy in the amounts necessary to stabilize Italian and Spanish yields in the 5% area.”

----

The ECB bought Italian government bonds today, according to four people with knowledge of the transactions, who asked not to be identified because the deals are confidential.
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Offline Letsbereal

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S&P downgrades Italy one notch to A
« Reply #15 on: September 20, 2011, 09:01:41 AM »
S&P downgrades Italy one notch to A
19 September 2011
, by Sarah Turner - Sydney (MarketWatch)
http://www.marketwatch.com/story/sp-downgrades-italy-one-notch-to-a-2011-09-19

Ratings agency Standard & Poor's said late Monday that it has cut its unsolicited long- and short-term sovereign credit ratings by one notch on the Republic of Italy to A/A-1 from A+/A-1+, with a negative outlook.

"The downgrade reflects our view of Italy's weakening economic growth prospects and our view that Italy's fragile governing coalition and policy differences within parliament will likely continue to limit the government's ability to respond decisively to the challenging domestic and external macroeconomic environment," S&P said.

"We think that the government's projection of 60 billion euros [$81.6 billion] of savings may not come to fruition," it said.
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Offline Letsbereal

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S&P lowers ratings on several Italian banks
« Reply #16 on: September 23, 2011, 07:26:37 AM »
S&P lowers ratings on several Italian banks
21 September 2011
, by Wallace Witkowski - San Francisco (MarketWatch)
http://www.marketwatch.com/story/sp-lowers-ratings-on-several-italian-banks-2011-09-21

Standard & Poor's lowered ratings on several Italian banks Wednesday following the credit rating agency's recent cut of the country's sovereign rating.

S&P lowered the long-term counterparty credit ratings of Mediobanca SpA, Findomestic Banca SpA, and Intesa Sanpaolo SpA to A from A+.

The agency also cut the long-term counterparty credit ratings on BNP Paribas' Italian unit Banca Nazionale del Lavoro SpA to A+ from AA-.

Also, S&P lowered the long-term issuer credit ratings on Cassa Depositi e Prestiti SpA to A from A+.

The ratings outlooks are negative.
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Offline Letsbereal

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Moody’s downgrades Italy’s bond rating
« Reply #17 on: October 04, 2011, 07:03:33 PM »
Moody’s downgrades Italy’s bond rating
4 October 2011
, by Carla Mozee - Los Angeles (MarketWatch)
http://www.marketwatch.com/story/moodys-downgrades-italys-bond-rating-2011-10-04

Italy's government-bond ratings were downgraded late Tuesday by Moody's Investors Service to A2 from Aa2, with a negative outlook.

The move was driven in part by a "material increase" in long-term funding risks for euro-area sovereigns with high levels of public debt, such as Italy, according to Moody's.

The agency affirmed its short-term ratings on Italy at Prime-1.

The action concludes a review for downgrade Moody's started in June.
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Offline Letsbereal

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Re: Moody’s downgrades Italy’s bond rating
« Reply #18 on: October 05, 2011, 06:31:35 PM »
Subject bump!
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Offline Letsbereal

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Moody's downgrades ratings on Italian banks
« Reply #19 on: October 05, 2011, 06:34:02 PM »
Moody's downgrades ratings on Italian banks
5 October 2011
, by Wallace Witkowski - San Francisco (MarketWatch)
http://www.marketwatch.com/story/moodys-downgrades-ratings-on-italian-banks-2011-10-05

Moody's Investor Service late Wednesday followed up its downgrade of Italy's sovereign debt on Tuesday with a downgrade of several Italian banks.

The ratings agency lowered the respective long-term ratings of both Intesa Sanpaolo and UniCredit SpA to A2 from Aa3.

Moody's also cut the long-term rating of Finmeccanica SpA to Baa2 from A3, and Terna SpA's long-term rating to A3 from A2.
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Offline Letsbereal

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Re: Moody’s downgrades Italy’s bond rating
« Reply #20 on: October 07, 2011, 08:03:06 AM »
Subject bump!
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Offline Letsbereal

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Re: Moody's downgrades ratings on Italian banks
« Reply #21 on: October 07, 2011, 08:04:30 AM »
Subject bump!
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Fitch Downgrades Italy To A+, Outlook Negative
« Reply #22 on: October 07, 2011, 12:34:26 PM »
Fitch Downgrades Italy To A+, Outlook Negative
7 October 2011
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/fitch-downgrades-italy-outlook-negative

Fitch Ratings-London/Milan-07 October 2011: Fitch Ratings has downgraded the Italian Republic's (Italy) foreign and local currency Long-term Issuer Default Ratings (IDRs) from 'AA-' (AA minus) to 'A+' (A plus) and the short-term rating from 'F1+' to 'F1'.

The Outlook on the long-term ratings is Negative.

The Country Ceiling of 'AAA' has also been affirmed
.

Next: France...
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S&P downgrades 24 Italian banks, financial firms
« Reply #23 on: October 18, 2011, 05:21:49 PM »
S&P downgrades 24 Italian banks, financial firms
18 October 2011
, (Reuters)
http://www.reuters.com/article/2011/10/18/us-italy-ratings-sp-idUSTRE79H4RZ20111018

Standard & Poor's on Tuesday downgraded 24 Italian banks and financial institutions, citing renewed "market tensions" and lower economic growth prospects.

The action was taken after a review of the implications of a tougher-than-previously-anticipated macroeconomic and financial environment for the Italian banks, the credit rating agency said.

"In our opinion, renewed market tensions in the euro zone's periphery, particularly in Italy, and dimming growth prospects have led to further deterioration in the operating environment for Italian banks," it said in a statement.
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ECB Rescues European Market, After It Buys Italian Bonds For Fourth Day In A Row
21 October 2011
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/ecb-rescues-european-market-after-it-buys-italian-bonds-fourth-day-row

Excerpt:

Following a report overnight from the WSJ that S&P would likely downgrade the credit ratings of France, Spain, Italy, Ireland and Portugal if the euro zone slips into another recession, which many economists say is likely, the entire overnight session was dominated by yet another period of fear and loathing out of Europe, further pressured by escalating uncertainty over EU summit after another meeting is called for Oct. 26.

The headline scanning brigade will focus on Belgium where at 2 pm local time EU finance ministers will meet in to hammer out groundwork for the Oct. 23 EU summit.

The result of concerns that absolutely nothing is resolved led to spreads for everything blowing out: at one point,

France 10-yr Yield was up +6 bps to 3.21% (the widest spread over bunds at 119.01 since 1992),

Italy 10-yr yield rose +3 bps to 6.05%, highest since Aug. 5, and the spread over bunds widens to euro-era record of 402 bps or most since 1996 and lastly the

10-yr Spain spread over bunds was +4 bps wider to 5.57%, with the Bund spread at 355, just tight of the August record of 398 bps.

Still this was enough for the ECB to intervene and as the chart below shows, to purchase Italian BTPs en masse for the fourth day in a row, this time with a sizable amount, even as it is now confirmed that ECB interventions hav a several hour half life.

And since the EURUSD and thus futures are now driven off the BTP price, everything rose when at 4 am Eastern the ECB began its daily intervention.

Alas, at this point even 8 year olds realize that these are short-term liquidity measures while the long-term solvency problem is merely getting worse.
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Offline Letsbereal

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Italian banks require an additional €15bn of capital buffers
« Reply #25 on: October 28, 2011, 05:47:20 AM »
Italian banks cool to demand for more capital
27 October 2011
, by Rachel Sanderson in Milan (Financial Times)
http://www.ft.com/intl/cms/s/0/a66424c2-008a-11e1-930b-00144feabdc0.html

Italian banks, fresh from a round of capital raising this spring, have given a cool response to demands from the European authority that they require an additional €15bn of capital buffers.
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Offline Letsbereal

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Italy at heart of crisis as borrowing costs climb
« Reply #26 on: October 28, 2011, 08:35:31 PM »
UPDATE 4-Italy at heart of crisis as borrowing costs climb
28 October 2011
, by James Mackenzie and Valentina Za - Rome (Reuters)
http://www.reuters.com/article/2011/10/28/italy-berlusconi-idUSL5E7LS3NE20111028

Excerpt:

* 10-year borrowing costs hit euro lifetime high

* Markets sceptical about Berlusconi's ability to deliver

* Premier calls euro "strange currency"

Italy's borrowing costs jumped to record levels on Friday, underlining its vulnerability at the heart of the euro zone debt crisis and scepticism about whether the struggling government of Prime Minister Silvio Berlusconi can deliver vital reforms
.

The 6.06% yield paid at an auction of 10-year bonds was the highest since the launch of the euro, and not far from the level reached before the European Central Bank intervened in August to cap Rome's borrowing costs by buying Italian debt.

Italy, the euro zone's third largest economy, is again at the centre of the debt crisis, as fears grow that its borrowing costs could hit levels that overwhelm the capacity of the bloc to provide support amid chronic political instability in Rome.
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Offline Letsbereal

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ECB Issues Ultimatum To Italy, Threatens To Halt Bond Purchases
« Reply #27 on: November 05, 2011, 05:50:46 PM »
ECB Issues Ultimatum To Italy, Threatens To Halt Bond Purchases
5 November 2011
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/ecb-issues-ultimatum-italy-threatens-halt-bond-purchases
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Offline Letsbereal

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Is 7% the tipping point for Italy?
« Reply #28 on: November 07, 2011, 09:31:19 PM »
Is 7% the tipping point for Italy?
7 November 2011
, by Jonathan Burton (MarketWatch - Blogs)
http://blogs.marketwatch.com/thetell/2011/11/07/is-7-the-tipping-point-for-italy/

Phil Barach, co-manager with Jeffrey Gundlach of DoubleLine Total Return Bond Fund, which has no European exposure, says:

7% is the crucial number” for the 10-year Italian government bond.

If rates get above 7%, “the markets will perceive that the story for Italy will become like the story for Greece
.

There has to be some change there and the problem is that unlike Greece, Italy is huge. There’s no real fix for Italy
.”

Barach continued: “ Greece is to the EU like Chicago is to the United States. Italy is probably like California and New York combined.

The EU has to stop dithering and take some decisive action, but it looks like they just can’t get their act together.

By the time they decide to make a decision it might be too late to put out the fire.”
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Offline Letsbereal

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Italy is bust; it’s just a question of when
« Reply #29 on: November 09, 2011, 04:57:54 AM »
Italy is bust; it’s just a question of when – Italy has a lot of debt, and a lifeless economy
8 November 2011
, by Matthew Lynn - London (MarketWatch)
http://www.marketwatch.com/story/italy-is-bust-its-just-a-question-of-when-2011-11-08

When a man has survived as many corruption, financial and sex scandals as Silvio Berlusconi has over his two decades in Italian politics, it would be a mistake to assume that a small matter like the imminent bankruptcy of his country will be anything other than a minor setback to his career.
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Offline Letsbereal

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Barclays Says Italy Is Finished: "Mathematically Beyond Point Of No Return"
« Reply #30 on: November 09, 2011, 05:11:48 AM »
Zero Hedge November 8, 2011

Barclays Says Italy Is Finished: "Mathematically Beyond Point Of No Return" http://www.zerohedge.com/news/barclays-says-italy-finished-mathematically-beyond-point-no-return

BTPs Breach 87 Support, 86.955 Last, ECB Makes A Political Statement By Not Intervening http://www.zerohedge.com/news/btps-breach-87-support-86955-last-ecb-makes-political-statement-not-intervening

L'orrore, L'orrore... In Three Quick Charts http://www.zerohedge.com/news/lorrore-lorrore-three-quick-charts

ECB ‘Inaction’ Succeeds In Doing What Nobody Has Achieved In Decades! Sending Risk Soaring http://www.zerohedge.com/news/ecb-inaction-succeeds-doing-what-nobody-has-achieved-decades-sends-risk-soaring


Zero Hedge November 9, 2011

Market Stalls As LCH Announces Margin Hikes On Italian Debt http://www.zerohedge.com/news/market-stalls-lch-announces-margin-hikes-italian-debt
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Offline Letsbereal

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Italy 10-year yield rises above critical 7% level
« Reply #31 on: November 09, 2011, 06:21:54 AM »
Italy 10-year yield rises above critical 7% level
9 November 2011
, by William L. Watts - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/italy-10-year-yield-rises-above-critical-7-level-2011-11-09

The yield on benchmark Italian 10-year government bonds moved above the critical 7% level widely viewed as unsustainable on Wednesday morning after clearing firm LCH.Clearnet raised margin requirements for trading Italian debt.

The yield IT:10YR_ITA -0.98% was seen at 7.09% in recent action, up 51 basis points from Tuesday, according to FactSet Research.

Sustained yields above the 7% level would translate into borrowing costs that would make it difficult for Italy to maintain funding needs, strategists say.
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Offline Letsbereal

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Margin boost pushes Italy yields to brink
« Reply #32 on: November 09, 2011, 06:28:46 AM »
Margin boost pushes Italy yields to brink
9 November 2011
, by William L. Watts - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/margin-boost-pushes-italy-yields-to-brink-2011-11-09

Italian bond yields hit fresh euro-era highs on Wednesday after LCH.Clearnet boosted the margin traders must provide to trade Italian government debt, pushing the nation’s borrowing costs ever closer to crisis levels a day after Prime Minister Silvio Berlusconi was effectively forced to commit to stepping down.
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Offline Letsbereal

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Italy’s unlucky No. 7%
« Reply #33 on: November 09, 2011, 06:37:07 AM »
Italy’s unlucky No. 7%
9 November 2011
, (MarketWatch - Blogs)
http://blogs.marketwatch.com/thetell/2011/11/09/italy%e2%80%99s-unlucky-no-7/

Excerpt:

But is there any real science behind that 7% figure — anything built into economics that suggests any government borrowing rate beyond this is unsustainable?

The answer is: not really. The Bank of Italy, which recently did some work on the subject, says that the country could survive, at least in the short term, with yields up to 8%.


Moreover, higher interest rates of the sort you see in that graph [see below] are in the secondary market — they only affect Italy’s own budget when it auctions off another slice of debt.

That happens quite frequently in Italy’s case — there is an €8bn ($11 billion) auction of debt next Monday — and so over time Italy’s debt interest costs will rise.

But it doesn’t happen overnight, so it’s not as if it is suddenly insolvent.


And unlike Greece, Spain, Portugal or indeed [the U.K.], Italy’s problems don’t derive directly from the financial crisis.

Yes, it has high debt — 120% of GDP — but this has been at the same level for many years, and the country has been able to finance itself and keep raising cash in the capital markets.
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Offline shipgeek

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Re: Italy is bust; it’s just a question of when
« Reply #34 on: November 09, 2011, 07:22:20 AM »
Italy is such a fabulous country... the bankster crooks have ruined it!!!

 >:(

Next stop is Sarkoland...
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Offline Letsbereal

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Visualizing Where The Pain Is: Summary Of Biggest Exposures To Italy
« Reply #35 on: November 09, 2011, 08:47:40 AM »
Visualizing Where The Pain Is: Summary Of Biggest Exposures To Italy
9 November 2011
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/visualizing-where-pain-summary-biggest-exposures-italy

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Offline larsonstdoc

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Re: Italy is bust; it’s just a question of when
« Reply #36 on: November 09, 2011, 09:44:02 AM »
Italy is such a fabulous country... the bankster crooks have ruined it!!!

 >:(

Next stop is Sarkoland...

  Without question--a beautiful country like Greece and yes the banksters are ruining these beautiful countries.
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Offline shipgeek

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Re: Italy is bust; it’s just a question of when
« Reply #37 on: November 09, 2011, 10:02:20 AM »
Euro???? Convergence criteria???
give me a break!!!!

It was all planned in advance!!!!

They knew they would have us f...kked big time with their Euro!!!

the Rothschilds, Rockefellers, Goldman Sachs, JPMorganChases don't care... they have their pockets full... they're at no risk...

All crooks!!!
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Offline shipgeek

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Bilderberger Mario Monti to Replace Berlusconi as Italian PM?
« Reply #38 on: November 10, 2011, 06:46:44 AM »
Bilderberger/CFR member to replace Berlusconi?

Looks like Mario Monti, nicknamed "SuperMario", will be chosen by the Italian President to form a new "technical" government.

Mario Monti was named Senator for Life last Sunday by President Napolitano.

http://www3.lastampa.it/politica/sezioni/articolo/lstp/429106/

He is the man to "reassure the markets".
Also he seems to have wide approval, from House President Fini (right wing) to Walter Veltroni former leader of opposition Democratic Party (left wing).

Calling for new elections would make 3 months without a Prime Minister from what I understand.

http://www3.lastampa.it/politica/sezioni/articolo/lstp/429115/

It seems likely that the President will name Mario Monti to be the next Italian Prime Minster after Silivo Berlusconi's resignation although there are other names circulating.

Who is Mario Monti... in brief
aside from being former President of the European Commission...

Mario Monti is the President of the Bocconi University of Milan and the first chairman of Bruegel, a European think tank founded in 2005.
He is also European Chairman of the Trilateral Commission, a neoliberal think tank founded in 1973 by David Rockefeller[2] and member of the Bilderberg Group [3].
On 15 September 2010 Monti supported the new initiative Spinelli Group, which was founded to reinvigorate the strive for federalisation of the European Union (EU). Other prominent supporters are: Jacques Delors, Daniel Cohn-Bendit, Guy Verhofstadt, Andrew Duff, Elmar Brok.
On 9 November 2011 Monti is nominated Senator for life by the Italian President Giorgio Napolitano.[5]

http://en.wikipedia.org/wiki/Mario_Monti
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Offline Letsbereal

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Italy Senate approves 2012 budget law - New Austerity Measures
« Reply #39 on: November 11, 2011, 08:56:52 AM »
Italy Senate approves 2012 budget law: reports
11 November 2011
, by William L. Watts - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/italy-senate-approves-2012-budget-law-reports-2011-11-11

Italy's Senate on Friday approved a budget law that includes new austerity measures, clearing the way for the parliament's lower chamber to pass the legislation on Saturday, news reports said.

The bill is widely expected to win final approval Saturday, clearing the way for embattled Prime Minister Silvio Berlusconi to resign, analysts said.

Financial markets have rebounded from a rout earlier in the week on expectations a technocratic government led by economist and former European Union commissioner Mario Monti will replace the outgoing government

and will move to implement the austerity plan and measures aimed at freeing up the nation's labor markets and other aspects of the economy.
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