ITALY DEBT IN FOCUS - Bad Loans, Bad Bank

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Offline Letsbereal

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Banks to dump more Italian debt
« Reply #40 on: November 13, 2011, 06:44:41 AM »
Banks to dump more Italian debt
11 November 2011
, by Gareth Gore, Spencer Anderson (IFR)
http://www.ifre.com/banks-to-dump-more-italian-debt/1615206.article

European banks are planning to dump more of the €300bn they own in Italian government debt, as they seek to pre-empt a worsening of the region’s debt crisis and avoid crippling writedowns – a move that could scupper the European Central Bank’s efforts to bring down soaring yields.

Still reeling from heavy losses on money they lent to Greece, lenders are keen not to make the same mistake twice.Then, under the pressure of governments and a hope that credit default swaps would protect them against heavy losses, they held on until it was too late to sell.

With the ECB providing a bid for Italian bonds that might not otherwise exist, board members at some of Europe’s largest bank say now is the time to accelerate disposals. Many are also reversing long-standing policies of buying into new Italian bond issues, denying Rome an important base of support.

Our traditional buying days are no longer,” said one board member at a European bank, one of Italy’s 10 biggest creditors, who added that the bank has also sold off previous bond purchases. “Unless there is more certainty on Italians changing direction, it will be very tough for them to find buyers.”

Banks are important creditors to Rome, having bought about 40% of the €22bn Italy issued in euro-denominated syndicated bonds since 2009. According to the European Banking Authority, the region’s biggest 90 banks held €326bn of Italian debt at the end of last year.

Many banks have since reduced their holdings, although the EBA numbers – released in July – are the most up-to-date cross-industry figures on nominal holdings.  Italy’s debt load totals around €1.7trn, with more than €300bn due to mature next year alone.

No point waiting

“You’re better off doing it now rather than waiting,” said one investment banker who is currently working on plans for bank clients to further sell down their Italian bond holdings. “It’s better to take the losses now when everyone is expecting it rather than wait around for a default.”

The ECB has been buying Italian bonds to keep down yields since August. Since then, the institution has bought about €110bn of European government debt, some of which traders say is Italian debt. Most sales have been and will be on the open market.

“The market is still as liquid as hell for those that want to sell,” added a senior banker at one non-European bank. “We managed to sell off half of our holdings in one morning.”

The sheer volume of such sales will make it increasingly difficult for the ECB to Italian keep bonds yields down. The yield on 10-year governments bonds surged as high as 7.5% this week, the most in the history of the eurozone and the highest for Italy since 1997. Selling intensified after LCH.Clearnet lifted its margin requirements on Italian debt. The 10-year Italian bonds currently trade at 85 cents on the euro.

Foreign banks are likely to be the biggest sellers, say bankers advising on the holdings. EBA stress tests showed that in December half of Italy’s 10 biggest European bank creditors were foreign: BNP Paribas held €28bn in bonds, Dexia €15.8bn, Commerzbank €11.7bn, Credit Agricole €10.8bn and HSBC €9.9bn.

Most of those banks have since reduced their exposureeither through outright sales, short positions or hedges – although direct comparisons are difficult because most banks only detail their net exposures. Still, in the four months to the end of October, BNP Paribas cut its Italian exposure by €8.3bn, while Commerzbank cut its exposure by €1.8bn in the first nine months of the year.

“I think what you are seeing right now is a lot of the short-dated stuff is being sold,” said Eric Strutz, chief financial officer at Commerzbank, on a recent call with analysts. “Do we expect another €2bn reduction in Q4? Right now, we’re looking into that.”

Other sellers include Societe Generale, which this week said it had halved its Italian net exposure since June to €2.5bn. Barclays, meanwhile, has reduced its net exposure to Italy by more than €1bn during the same three month period.

According to people close to some of the bank disposals, the efforts of the European authorities to ensure that a Greek debt restructuring would not trigger CDS payouts has driven much of the bond selling.

Unable to confidently hedge their exposures, many are choosing to sell – even at a loss.

Support

Italian bonds still have one support bloc. Domestic banks appear to be holding on to their much larger holdings. As of last December, EBA stress tests showed Intesa Sanpaolo held €60bn of Italian debt. UniCredit and Banca Monte dei Paschi di Siena held €49bn and €32bn respectively. Recent results indicate that those holdings have changed little.

“We will keep investing the largest part of our liquidity in Italian government bonds,” said Corrado Passera, chief executive officer at Intesa Sanpaolo, in a call with analysts this week. “We believe they provide the right yields vis-à-vis the cost. So no policy change on our side.”

Still, according to the investment banker advising firms on their Italian holdings, the domestic banks’ decisions to hold on could have more to do with their inability to offload such large amounts quickly and without deep losses. Indeed, some Italian bankers seem resigned to the situation.

“We feel that fears of a default are greatly overdone, but the market psychology is what it is,” added an executive board member at another large Italian bank, which is also holding onto its bonds. “Lots of players do not want to buy them. They think it is better to sell if you have the opportunity to.”

Capital concerns are also preventing them from selling. “The key issue is on solvency and I think they made a mistake in requiring us to hold more capital,” said the chief executive of a mid-sized Italian bank. “To meet these levels we cannot sell too much of our sovereign debt.”

(This story is to appear in the November 12 print edition of the International Financing Review)
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Offline larsonstdoc

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Re: Banks to dump more Italian debt
« Reply #41 on: November 13, 2011, 06:35:24 PM »

  Spain's problems are 10X worse than Greece and Italy's problems are 40 to 50X worse than Greece.

                                            ------- Dan Cofall on the AJ Show about a week ago (paraphrase)
I'M A DEPLORABLE KNUCKLEHEAD THAT SUPPORTS PRESIDENT TRUMP.  MAY GOD BLESS HIM AND KEEP HIM SAFE.

Offline Letsbereal

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Italy's Senate approves $39 billion emergency austerity plan
« Reply #42 on: December 23, 2011, 01:46:12 PM »
Italy's Senate approves emergency austerity plan
23 December 2011
, by Barbara Kollmeyer - Madrid (MarketWatch)
http://www.marketwatch.com/story/italys-senate-approves-emergency-austerity-plan-2011-12-23

Italy's Prime Minister Mario Monti secured approval for his €30 billion ($39 billion) emergency austerity package, media reports said.

The package won a final confidence vote in the Senate after a lengthy debate Thursday evening.

Italy's two main parties, the center-right People of Freedom and the center-left Democratic Party, have opposed the plan, but backed it in the end "for a sense of responsibility."

Monti had called a confidence vote in both parliament chambers to try and speed up the package. The lower house of parliament passed the package last Friday.
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Offline Letsbereal

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ECB buys Spanish, Italian bonds: report
« Reply #43 on: January 06, 2012, 07:23:15 PM »
ECB buys Spanish, Italian bonds: report
6 January 2012
, Frankfurt (MarketWatch)
http://www.marketwatch.com/story/ecb-buys-spanish-italian-bonds-report-2012-01-06

The European Central Bank stepped into bond markets again on Friday to buy Spanish and Italian government debt after yields jumped ahead of expected auctions by both nations next week, The Wall Street Journal reported.

The ECB has been a regular buyer of Spanish and Italian debt in the secondary market through its Securities Market Program since early August, traders say.

Italy's 10-year yield remained at 7.09%, a rise of 15 basis points from Thursday, but off an intraday high near 7.14%.

Yields rise as bond prices fall.

A yield of more than 7% is viewed as potentially unsustainable for government borrowers over the long run.

Spain's 10-year yield fell to 5.55%, down 3 basis points on the day and well off an intraday high around 5.65%.
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Offline Letsbereal

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New ECB member Asmussen defends bond buys
« Reply #44 on: January 06, 2012, 07:26:27 PM »
New ECB member Asmussen defends bond buys
6 January 2012
, by Todd Buell - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/new-ecb-member-asmussen-defends-bond-buys-2012-01-06

New European Central Bank Executive Board member Joerg Asmussen defended Friday the central bank's purchases of government bonds, as long as they are limited in time and volume.

Asmussen said this in an interview to German regional broadcaster SWR, according to a summary of the conversation posted on its website.

The former German deputy finance minister took over at the central bank at the start of the year, replacing Juergen Stark.

Asmussen, however, didn't receive the coveted position as head of the economics division, which in the past had always gone to a German, most recently Stark and prior to him Otmar Issing.

Rather, he received the portfolio of international relations, but with "beefed up" responsibilities, including attending meetings of European ministers with the ECB's president or vice president.

The ECB's purchases of government bonds have been controversial in Germany since the program started in May 2010, given that it is feared that these will lead to inflation.

The ECB counters that by removing the liquidity from the market that it pumps in to buy the bonds on a weekly basis it is mitigating the inflationary threat.
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Offline Letsbereal

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ECB Resumes Buying Bonds With Gusto As Italian Yields Remain Well Wide Of 7%
« Reply #45 on: January 09, 2012, 10:33:16 PM »
ECB Resumes Buying Bonds With Gusto As Italian Yields Remain Well Wide Of 7%
9 January 2012
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/ecb-resumes-buying-bonds-gusto-italian-yields-remain-well-wide-7

Italian Bonds Surge To Early November Wides
9 January 2012
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/italian-bonds-surge-early-november-wides

Italian Banks Plunge On Capital Raise Concerns
9 January 2012
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/italian-banks-plunge-capital-raise-concerns
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Offline Letsbereal

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Italian 10-year bond yields in 2011
« Reply #46 on: January 09, 2012, 11:36:44 PM »
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Offline Letsbereal

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Italy wants EU bailout fund doubled to €1 trillion ($1.29 trillion)
« Reply #47 on: January 22, 2012, 02:42:28 AM »
Italy wants EU bailout fund doubled - German magazine
21 January 2012
, Berlin (Reuters)
http://uk.reuters.com/article/2012/01/21/uk-eurozone-italy-idUKTRE80K0OJ20120121

Italian Prime Minister Mario Monti wants the lending capacity of the euro zone's permanent rescue fund to be doubled to €1 trillion ($1.29 trillion), German magazine Der Spiegel wrote on Saturday, without citing sources.

"Monti argues that such a measure would create confidence in the currency union," Spiegel wrote.

"He has informed the German government of his wishes."

Spiegel said Monti's fellow countryman and European Central Bank President Mario Draghi agreed the European Stability Mechanism (ESM) should beef up its effective lending capacity beyond the €500 billion planned.

He believes the leftover funds from the European Financial Stability Facility (EFSF), the temporary €440 billion fund lending to Ireland and Portugal, should be put at the ESM's disposal in addition to the €500 billion, Spiegel wrote.

The draft treaty establishing the ESM will be discussed by euro zone finance ministers on Monday and is likely to be approved by EU leaders at a summit on January 30, euro zone officials said last week.

($1 = €0.7740)
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Offline Letsbereal

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Italy should focus on growth, not austerity – Fitch
« Reply #48 on: February 02, 2012, 06:49:22 AM »
Italy should focus on growth, not austerity - Fitch
1 February 2012
, by Walter Brandimarte - New York (Reuters)
http://uk.reuters.com/article/2012/02/01/uk-europe-ratings-fitch-idUKTRE8101FH20120201

Italy should focus more on boosting economic growth rather than implementing additional austerity measures to ensure the sustainability of its public debt and the survival of the euro, Fitch Ratings said on Wednesday.
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Offline Letsbereal

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S&P Downgrades 34 Of 37 Italian Banks - Full Statement
« Reply #49 on: February 10, 2012, 05:07:53 PM »
S&P Downgrades 34 Of 37 Italian Banks - Full Statement
10 February 2012
, Tyler Durden (Zero Hedge)
www.zerohedge.com/news/sp-downgrades-34-37-italian-banks-full-statement


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Offline Letsbereal

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Moody's Downgrades Italy, Spain, Portugal - UK, France On Outlook Negative
« Reply #50 on: February 13, 2012, 06:13:44 PM »
Moody's Downgrades Italy, Spain, Portugal And Other, Puts UK, France On Outlook Negative - Full Statement
13 February 2012
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/moodys-downgrades-italy-spain-portugal-and-other-puts-uk-france-outlook-negative-full-statement

Excerpt:

You know there is a reason why Europe just came crawling with an advance handout looking for US assistance: Moody's jsut went apeshit on Europe. In other news, we wouldn't want to be the company that insured Moody's Milan offices.

Moody's adjusts ratings of 9 European sovereigns to capture downside risks

As anticipated in November 2011, Moody's Investors Service has today adjusted the sovereign debt ratings of selected EU countries in order to reflect their susceptibility to the growing financial and macroeconomic risks emanating from the euro area crisis and how these risks exacerbate the affected countries' own specific challenges.

Moody's actions can be summarised as follows:

- Austria: outlook on Aaa rating changed to negative

- France: outlook on Aaa rating changed to negative

- Italy: downgraded to A3 from A2, negative outlook

- Malta: downgraded to A3 from A2, negative outlook

- Portugal: downgraded to Ba3 from Ba2, negative outlook

- Slovakia: downgraded to A2 from A1, negative outlook

- Slovenia: downgraded to A2 from A1, negative outlook

- Spain: downgraded to A3 from A1, negative outlook

- United Kingdom: outlook on Aaa rating changed to negative


Please see the individual country specific statements below for more detailed information relating to the rating rationale and the sensitivity analysis for each affected sovereign issuer.

The implications of these actions for directly and indirectly related ratings will be reported through separate press releases.

The main drivers of today's actions are:

- The uncertainty over (i) the euro area's prospects for institutional reform of its fiscal and economic framework and (ii) the resources that will be made available to deal with the crisis.

- Europe's increasingly weak macroeconomic prospects, which threaten the implementation of domestic austerity programmes and the structural reforms that are needed to promote competitiveness.

- The impact that Moody's believes these factors will continue to have on market confidence, which is likely to remain fragile, with a high potential for further shocks to funding conditions for stressed sovereigns and banks.

To a varying degree, these factors are constraining the creditworthiness of all European sovereigns and exacerbating the susceptibility of a number of sovereigns to particular financial and macroeconomic exposures.
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Offline Letsbereal

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ECB funding to Italian banks rose in March
« Reply #51 on: April 07, 2012, 07:08:34 AM »
ECB funding to Italian banks rose in March
6 April 2012
, by Liam Moloney - Rome (MarketWatch)
http://www.marketwatch.com/story/ecb-funding-to-italian-banks-rose-in-march-2012-04-06

Italian banks tapped the European Central Bank for €270.4 billion in March, up from €194.1 billion in February, data issued by the Italian central bank showed Friday.

The banks took out €267.6 billion in longer-term loans, a sharp rise from €140.1 billion at the end of February, according to the Bank of Italy.

A smaller share of the money came from the ECB's weekly refinancing operations, €2.41 billion compared with €7.79 billion in February.
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Offline Letsbereal

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The Easter Egg: Italy's Latest Parabolic Curve
« Reply #52 on: April 08, 2012, 04:55:45 AM »
The Easter Egg: Italy's Latest Parabolic Curve
6 April 2012
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/easter-egg-italys-latest-parabolic-curve

Italian banks saw their ECB support surge from €195 billion to €270 billion, the highest ever, 39% more than in February, and 776% more than greater than a year earlier, and now merely the latest parabolic curve to love and hold dear.



Indicatively, on the chart below we have also added Spanish bank borrowings from the ECB (still pending a March update), which in February were also at an all time high of €152 billion.
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Offline Letsbereal

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Spanish an Italian Bank ECB Borrowings Go Parabolic
« Reply #53 on: April 13, 2012, 08:04:57 AM »
Spain CDS Surges Just Shy Of Record As Spanish Bank ECB Borrowings Go Parabolic
13 April 2012
, by Tyler Durden (ZeroHedge)
http://www.zerohedge.com/news/spain-cds-surges-just-shy-record-spanish-bank-ecb-borrowings-go-parabolic

Excerpt:

Spain bank borrowings from ECB:



And Spain and Italy bank borrowings from ECB:

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Offline Letsbereal

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Italy to delay balanced budget by a year: report
« Reply #54 on: April 18, 2012, 06:54:54 AM »
Italy to delay balanced budget by a year: report
18 April 2012
, by William L. Watts - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/italy-to-delay-balanced-budget-by-a-year-report-2012-04-18

The Italian government will delay its plan to reach a balanced budget in 2013 by a year due to a weaker economic outlook, Reuters reported Wednesday, citing a draft document expected to be approved by Prime Minister Mario Monti's cabinet later in the day.

The plan raises Italy's 2012 deficit target to 1.7% of GDP from 1.6%, the report said, while the 2013 goal is raised to 0.5% from 0.1%.

The plan calls for a nearly balanced budget, with a deficit of 0.1% of GDP, in 2014.

Italy has one of the smallest deficits in the euro zone but is struggling to convince investors it can rein in the size of its overall debt pile, which at around 120% of GDP is second only to Greece in the euro zone.
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Offline Letsbereal

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European Spreadwatch Alert As Italian Bank Borrowings From ECB Rise To New Record
8 May 2012
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/european-spreadwatch-alert-italian-bank-borrowings-ecb-rise-new-record

Excerpt:

It may not be a big rise, but the €1 billion increase in Italian bank borrowings from the ECB, from €270 billion to €271 billion in Apirl as just reported by the Bank of Italy, is still a record, and not one Italy should be proud of.

The Spanish bank update is pending and will be out in a few days, although if the recent about face by Rajoy, admitting the Spanish banks are about to be nationalized, which today is no longer sending the markets higher, is an indication, it won't be a vast improvement.

Sure enough, the fact that the market's attention is once again drawn to an indicator of the PIIGS financial sector insolvency is not good for sovereign spreads and at last check everyone was wider, core and periphery together, as

Spain was+5.3 bps,

Italy +3.8 bps,

Netherlands +0.3 bps, and

France 1.8 bps.

Even the futures are shocking not green on more bad news.

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Offline Letsbereal

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Moody’s attacks Italy - Cuts ratings on 26 banks
« Reply #56 on: May 14, 2012, 11:24:08 PM »
Moody's cuts ratings on 26 Italian banks
14 May 2012
, by Drew FitzGerald (MarketWatch)
http://www.marketwatch.com/story/moodys-cuts-ratings-on-26-italian-banks-2012-05-14

Moody's Investors Service on Monday downgraded 26 Italian banks to reflect the reduced level of support they might receive from the national government should they run into trouble.

Moody's cut 10 banks by one notch and lowered another eight by two notches.

Six banks received three-notch downgrades and two were cut by four notches.

Five of the banks downgraded Monday are part of larger financial groups.

Moody's has warned in recent months it could lower its credit ratings on number of European financial institutions due to ongoing fiscal woes in their home countries.

The changes often reflect the countries' decreased ability to bail out potentially troubled banks more than any change in the individual institutions' credit metrics.
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Offline Letsbereal

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Downgrade increases Italian banks' woes
« Reply #57 on: May 15, 2012, 05:34:59 PM »
Downgrade increases Italian banks' woes http://www.youtube.com/watch?v=98bMmzEWJ6A

15 May 2012 by Euronews

Italian banks have suffered another blow with a mass downgrade by rating agency Moody's.

They were already struggling with shrinking demand and soaring bad loans in austerity-hit Italy.

The 26 large and medium-sized Italian banks that have had their ratings cut will find it more difficult to borrow money.

The downgrades came as new figures show Italy's economy slid further into recession in the first three months of this year.

The Italian economy contracted by a larger-than-expected 0.8% quarter-on-quarter in the first three months of 2012.

Moody's action makes the ratings of Italian banks among the lowest of comparable European countries, with Banca Monte dei Paschi di Siena just above "junk" or non-investment grade status.

The move adds to funding difficulties stemming from the eurozone sovereign debt crisis and is expected to make it more costly for already hard-pressed Italian banks to finance their needs, increasing their reliance on European Central Bank funds.

*Sharp reaction*

The European Central Bank should disregard Moody's decision to downgrade 26 Italian banks in its own relations with local lenders, the head of the Italian banking association ABI said.

"We forcefully ask that the ECB and European institutions disregard these judgements, otherwise it will create a short circuit we will never be able to get out of," ABI head Giuseppe Mussari told a conference in southern Italy

The move was criticised as part of a "never-ending attack" on Italy by the head of Italian employers lobby Confindustria.

"These judgements should be made with more care, the situation is delicate and there is a never-ending attack that worries us," Confindustria president Emma Marcegaglia said.
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Offline Letsbereal

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Italy, Spain insurers most exposed to Greece
« Reply #58 on: May 24, 2012, 10:34:47 PM »
Italy, Spain insurers most exposed to Greece
24 May 2012
, by Kim Hjelmgaard - London (MarketWatch)
http://www.marketwatch.com/story/italy-spain-insurers-most-exposed-to-greece-2012-05-24

Italian and Spanish insurers would have the most to lose were Greece to leave the euro zone, Fitch Ratings said on Thursday.

Fitch said the exposure was related to the potential "contagion effect it [the Greek exit] could have on Italian and Spanish sovereign and bank debt.

Insurers in Germany and the U.K., by contrast, are "well-insulated from rising risks in the euro-zone periphery, Fitch said.

Fitch said a Greek exit is not its "base-case scenario."
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Offline Letsbereal

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Italy, Spain default insurance costs hit record
« Reply #59 on: June 01, 2012, 07:51:51 PM »
Italy, Spain default insurance costs hit record
1 June 2012
. by William L. Watts - Frankfurt (MarketWatch)
http://www.marketwatch.com/story/italy-spain-default-insurance-costs-hit-record-2012-06-01

The cost of insuring Spanish and Italian government debt against default via instruments known as credit default swaps, or CDS, hit new records on Friday, according to data provider Markit.

The spread on five-year Spanish CDS widened to 610 basis points from 596 basis points on Thursday.

That means it would now cost $610,000 annually to insure $10 million of Spanish debt against default for five years, up $14,000 from the previous day.

The spread on Italian CDS widened by 22 basis points to 579.

Core euro-zone countries also saw a rise, with the French CDS spread widening by 8 basis points to 225 and Germany widening by 4 basis points to 106, Markit said.
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Offline Letsbereal

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ECB Must Print Euros or Italy May Say ‘Ciao:’ Berlusconi
« Reply #60 on: June 02, 2012, 08:35:43 AM »
ECB Must Print Euros or Italy May Say ‘Ciao:’ Berlusconi
1 June 2012
, by Lorenzo Totaro and Jeffrey Donovan (Bloomberg)
http://www.bloomberg.com/news/2012-06-01/berlusconi-says-ecb-must-print-euros-or-italy-may-say-ciao-1-.html

Excerpt:

Former Premier Silvio Berlusconi said Italy should say “ciao, euro” if the European Central Bank doesn’t start printing money to tackle the debt crisis and Germany should quit the single currency if it won’t back a bolder role for ECB.

“The economic crisis can’t be solved” in Italy, Berlusconi said in comments posted on his party’s website today. He called on Prime Minister Mario Monti to “change his political line” and lobby European leaders to back a money- printing campaign by the Frankfurt-based ECB.

If the central bank doesn’t become a “lender of last resort,” Italy should say “ciao, euro,” the former premier said.

The media tycoon-turned-politician became the latest European leaders to step up pressure on German Chancellor Angela Merkel and the ECB to permit a more aggressive response to the region’s debt crisis.

Monti yesterday called on Merkel to drop her opposition to allowing the euro region’s rescue mechanism to lend directly to banks.

The 17-nation euro area “has a significant risk of breaking up” unless policy makers revamp the bloc’s fiscal and economic ties, Economic and Monetary Commissioner Olli Rehn said today in a speech in Helsinki.

“We’re either headed for a deterioration of the euro area or a gradual strengthening of the European Union.”
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Offline Letsbereal

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Spanish Bank Borrowings From ECB Surpass Italian, As Italy Sovereign Debt Hits Record €1.95 Trillion
14 June 2012
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/spanish-bank-borrowings-ecb-surpass-italian-italy-sovereign-debt-hits-record-%E2%82%AC195-trillion

Excerpt:

First, we observe the just released data showing Spanish bank borrowings from the ECB:

at €287.8 billion, this was a €24 billion increase from April, €235 billion from a year earlier, and the highest ever.

For the first time since June of 2011, Spanish bank ECB borrowings increased to more than those of Italy, which at just €272.7 billion rose a mere €2 billion from April month (to a new record as well).

In other words, both Italy and Spanish banks are now spurned by counterparties everywhere, but Spain's a little bit more than Italy's.

Yet before Italy gloats, it bears reminding Italy that its own offsetting factor, and where it is weakest,

its insane public debt, just hit a new record high of €1.95 trillion, pushing the country's debt to GDP ratio well into the 120%+ range.
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Offline Letsbereal

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Italy Pays More For 6 Month Debt Than America Pays For 30 Year
« Reply #62 on: June 27, 2012, 12:43:31 PM »
Italy Pays More For 6 Month Debt Than America Pays For 30 Year, As LTRO Claims Its First Bank Insolvency
27 June 2012
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/italy-pays-more-6-month-debt-america-pays-30-year-ltro-claims-its-first-bank-insolvency

Today Italy had a rather critical Bill auction in which it sold €9 billion in debt due six months from today.

Obviously, since the maturity is well inside of the LTRO, the auction itself was rather meaningless from a risk standpoint.

Still, the good news is that Italy managed to place the entire maximum amount targeted.

The bad news: it cost Italy more to raise 6 months of debt, or 2.957%, than it costs the US to borrow for 30 years (2.70%).

Not only that but the average yield 2.957% was the highest since December when the Italian 10 Year was north of 7%, and nearly 50% higher compared to the 2.104% at auction on May 29, or less than a month ago.

The Bid/Cover of 1.62 was unchanged compared to the 1.61 at the May 29 auction.

From Reuters:

"Today's bill sale points to the sovereign getting this supply away but at yield levels sufficiently elevated to leave a niggling doubt at least as to the medium-term sustainability of the country's public finances," said Richard McGuire, a rate strategist at Rabobank.

On Tuesday, Spain paid 3.24% to sell six-month bills.

Madrid is seen at risk of having to ask for more aid after formally requesting a European rescue for its banks this week.

But doubts are also growing on Italy's ability to keep funding its €1.95 trillion debt, which makes it the world's fourth-largest sovereign debtor.

Domestic appetite has so far allowed the Treasury to complete 56% of its €445 billion annual funding plan."

It gets worse.

Recall that the LTRO was conceived back in December 2011 precisely to facilitate the sovereign debt ponzi in a way where domestic banks would borrow from the ECB only to buy their own sovereign debt,

a circumvention of the ECB's prohibition to buy sovereign debt in the primary market, and a plan that was so circular those who actually could see through it would scream a warning to anyone who cared.

Six months later, the chickens have come home to roost:

Italian banks may find it increasingly difficult to keep shouldering the country's large funding needs as foreign investors continue to shun its debt.

Italy's third-largest lender Monte dei Paschi dei Siena said on Wednesday it would progressively reduce its holdings of Italian government bonds, after tapping state aid to plug a capital shortfall partly due to its exposure to sovereign risk.

And there it is: instead of a solvency enhancing instrument, the LTRO, by forcing banks to double down on sovereign bonds, has resulted in accelerating their demise as BMPS showed yesterday!

Which incidentally may have just blown up Mario Draghi's Plan B - as a reminder, the only reason why sovereign debt tightened last week was due to the announcement of expansion in eligible collateral by the ECB, something which most saw as a precursor to a new LTRO.

Well, if the LTRO is now seen for what it truly is: a mechanism that precipitates insolvency, will anyone have any interest in it, especially with vigilantes dying to rip apart any firm that is associated with the Stigma of needing LTRO and thus signing its own death sentence?

And all this ignores the fact that, as we have been saying since January, Europe has run out of actual, money good assets...
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Offline Letsbereal

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Confindustria pegs 2012 Italy GDP at minus-2.4%
« Reply #63 on: June 28, 2012, 11:26:34 AM »
Confindustria pegs 2012 Italy GDP at minus-2.4%
28 June 2012
, by Giovanni Legorano - Milan (MarketWatch)
http://www.marketwatch.com/story/confindustria-pegs-2012-italy-gdp-at-minus-24-2012-06-28

Italy's business lobby Confindustria Wednesday sharply lowered its outlook for the country's economy, saying GDP will shrink 2.4% in 2012 and 0.3% in 2013.

The original forecast published by the organization in December saw Italy's GDP down 1.6% in 2012, but up 0.6% in 2013.

"Italy's has fallen into a serious recession.

This happened after only after two years of slow and partial recovery from the deepest fall recorded in the last 80 years," Confindustria's research center said.

Confindustria expects the country to post a primary surplus of 4.3% of GDP in 2013, in unadjusted terms.

The government hopes to balance its budget by 2013 but Confindustria said the shrinking economy will make that harder to achieve.

It predicted a deficit-to-GDP ratio of 2.6% in 2012 and 1.6% in 2013.

It also said labor markets will continue to deteriorate and unemployment will grow.

"The scenario is quite bleak. We'll go back to positive territory only from the spring of next year," the organization said.
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Offline America2

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Re: Confindustria pegs 2012 Italy GDP at minus-2.4%
« Reply #64 on: June 28, 2012, 11:32:12 AM »
With all the hoopla over the Obamacare ruling this morning - this is news that seems to be getting overlooked(and shouldn't be).

Keep up the good work in posting these news items, especially today! :)

Offline Letsbereal

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Italy Q1 budget deficit/GDP at 8% - Highest since Q1 2009
« Reply #65 on: July 04, 2012, 02:55:55 PM »
Italy Q1 budget deficit/GDP at 8 per cent, highest since Q1 2009
4 July 2012
, Rome (The Economic Times)
http://economictimes.indiatimes.com/news/international-business/italy-q1-budget-deficit/gdp-at-8-per-cent-highest-since-q1-2009/articleshow/14670539.cms

Italy's budget deficit in the first quarter of 2012 widened to 8.0% of GDP compared with 7.0% in the same period of last year, the highest since the start of 2009, statistics agency ISTAT said on Wednesday.

The widening of the deficit in the first quarter was due to a 1.0% annual fall in revenues and a 1.3% increase in public spending.

Debt servicing costs rose a steep 16 per cent year-on-year, due to the rise in yields on Italian sovereign debt.

The first quarter deficit was the widest for any quarter since Q1, 2009, ISTAT said.

Mario Monti's technocrat government has an official target of a 2012 deficit of 1.7% of GDP, less than half the 3.9% deficit registered in 2011.

Monti is expecting a marked reduction in the deficit in the second quarter thanks to tax hikes contained in his austerity package introduced at the end of last year, in particular a new housing tax.

Quarterly public finance data issued by the Treasury this week, based on narrower, central government accounts than those used by ISTAT, showed the state sector deficit in the first six months stood at €29.1 billion, compared with €43.9 billion in the same period of 2011.

The deficit measure published by ISTAT is very close to, but not fully comparable, with the deficit aggregate relevant to the EU's Growth and Stability Pact because ISTAT's data do not take into account the impact of debt servicing costs arising from government debt swap operations.

The impact of these operations is normally minimal.
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Offline Letsbereal

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IMF Sees Italy’s GDP At -1.9% In 2012, -0.3% In 2013
« Reply #66 on: July 11, 2012, 07:27:12 PM »
IMF Sees Italy’s GDP At -1.9% In 2012, -0.3% In 2013
10 July 2012
, Berlin (MNI)
http://www.forexlive.com/blog/2012/07/10/imf-sees-italys-gdp-at-1-9-in-2012-0-3-in-2013

The International Monetary Fund forecast on Tuesday that Italy’s economy will decline by 1.9% this year and by another 0.3% next year.

“The economy is expected to continue contracting through the year owing to tight financial conditions, the global slowdown, and the needed fiscal consolidation,” the IMF said in its so-called Article IV staff
report.

“Absent shocks, the recovery will take hold in early 2013, led by a modest pickup in exports, but will lag the rest of the region,” the fund predicted.

“The risks to the outlook are however on the downside, stemming mainly from an intensification of the euro area crisis,” the IMF cautioned.

Over the medium term, low trend productivity and an aging society are likely to constrain Italy’s growth prospects, the report said.

“The steady loss in competitiveness over the past decade, if remained unaddressed, will remain a drag on growth,” the fund said.

It stressed the importance for Italy of maintaining its current momentum for reforms:

“To revive growth, priority should be given to raising productivity and labor participation, pursuing growth-friendly fiscal consolidation, and promoting a more dynamic and resilient banking system.”

Inflation will ease only gradually over the forecasting period, as the impact of weak demand is partly offset by higher indirect taxes, the report assessed.

It projected consumer prices to rise by 3.0% this year and by 2.1% next year.

On the fiscal side, the IMF welcomed the government’s increased focus on targeting a structural balance to ensure flexibility in fiscal policy.

The fund encouraged the government to rebalance the adjustment towards expenditure cuts and lower taxes.

“The recently announced package of spending cuts is a step in the right direction,” it remarked.

The report noted that there is still scope for cutting the public sector wage bill, reducing tax expenditures, and stepping up efforts against tax evasion.

It also pointed to the need to pursue more comprehensive privatization.

The IMF forecast that the country’s public deficit will fall from 3.9% of GDP last year to 2.6% this year and 1.5% next year.

Public debt is seen rising from 120.1% of GDP in 2011 to 125.8% in 2012 and to 126.4% in 2013.

The financial turmoil has put Italian banks under stress, the report noted.

Still, banks have made progress in strengthening their capital positions and raising private capital to meet the targets set by the European Banking Authority (EBA), the fund said.

“Banks need to maintain adequate capital and liquidity buffers to remain resilient to the downturn,” the report stated.

Reducing impaired loans would free up resources for new lending and strengthen banks’ balance sheets, the IMF said.
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Offline Letsbereal

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Moody’s Downgrades Italy’s To Baa2 From A3, Negative Outlook
« Reply #67 on: July 12, 2012, 10:34:12 PM »
Moody’s Downgrades Italy’s To Baa2 From A3, Negative Outlook – Full Text
12 July 2012
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/moodys-downgrades-italys-baa2-a3-negative-outlook-full-text
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Offline Letsbereal

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Moody's lowers ratings at 13 Italian banks
« Reply #68 on: July 16, 2012, 11:45:01 PM »
Moody's lowers ratings at 13 Italian banks
16 July 2012
, by Wallace Witkowski - San Francisco (MarketWatch)
http://www.marketwatch.com/story/moodys-lowers-ratings-at-13-italian-banks-2012-07-16

Moody's Investors Service said late Monday it downgraded ratings on 13 Italian banks following a downgrade of the country's sovereign rating on Friday.

Banks affected include UniCredit SPA, Intesa Sanpaolo SPA , BNP Paribas' Italian unit Banca Nazionale del Lavoro SPA, Banca Carige SPA, Credito Emiliano , and General Electric Co.'s GE Capital SPA.
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Offline Letsbereal

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S&P downgrades 15 Italian banks on deeper recession
« Reply #69 on: August 04, 2012, 06:38:19 AM »
S&P downgrades Italian banks on deeper recession
3 August 2012
, by Nathalie Tadena (MarketWatch)
http://www.marketwatch.com/story/sp-downgrades-italian-banks-on-deeper-recession-2012-08-03

Standard & Poor's Ratings Services raised its economic-risk score on Italy and downgraded 15 Italian banks, noting the country faces a deeper and more prolonged recession than the firm had originally anticipated.

S&P also lowered its outlook on one bank and removed ratings on four of them from negative Credit Watch.

A severe recession likely will increase Italian banks' problem assets in 2012 and 2013 to levels higher than anticipated, and higher than other banks in Europe, the ratings firm said.

At the same time, the banks' coverage of problem assets has weakened in the past few years, S&P said.

S&P revised its economic-risk score, which is a component of its banking-industry country-risk assessment, to 5 from 4.

The firm now views credit risk in the Italian economy at "high risk" from its earlier assessment of "intermediate risk."

It affirmed Italy's BICRA at group 4.

The ratings firm now expects Italy's GDP to decline 2.1% in 2012 and 0.4% next year.

S&P noted the state of the Italian economy, which hasn't recovered since its 2008-09 recession, is increasing the vulnerability of its banks' asset quality.

S&P projects Italian banks' problem assets, or the sum of bad loans and watchlist loans, will rise to €218 billion by the end of 2013, compared with €166 billion at the end of 2011.

Italian banks' problem assets at year-end 2011 had already more than doubled from €75 billion in 2008, owing to the recession, the firm added.

The firm also said Italian banks' coverage of problem assets through provisioning has decreased further over the past few years.

Last month, peer Fitch Ratings affirmed Italy's long-term ratings at A-minus,

pointing to the country's structural reforms to enhance the growth potential of the economy and commitment to reducing the budget deficit and public debt.

Meanwhile, Moody's Investors Service downgraded Italy's government-bond rating two notches to Baa2 in July,

saying the country faces a greater likelihood of a further sharp increase in funding costs or loss of market access given euro-area risks and that its economy has continued to deteriorate.

Moody's also lowered its long-term ratings on 10 Italian banks and its issuer ratings on three Italian financial institutions by one to two notches last month.

In January, S&P cut Italy's rating by two notches to triple-B-plus.
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Offline Letsbereal

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ECB Bond-Buying Won’t Solve Spain, Italy Woes, Coene Says
« Reply #70 on: August 12, 2012, 05:03:10 AM »
ECB Bond-Buying Won’t Solve Spain, Italy Woes, Coene Says
11 August 2012
, by Rebecca Christie and John Martens (Bloomberg)
http://www.bloomberg.com/news/2012-08-11/ecb-bond-buying-won-t-solve-spain-italy-woes-coene-says.html

Excerpt:

European Central Bank bond purchases won’t solve Spain and Italy’s difficulties maintaining investor confidence, ECB Governing Council member Luc Coene said in an interview with De Tijd and L’Echo.

Bond yields have been rising because financial markets don’t trust Spanish and Italian authorities to take the measures necessary to repair their economies, Coene said in the interview, published today in the two Belgian newspapers.

As a result, he predicted few benefits from any ECB action.

“It makes no sense for the ECB to start financing those countries,” said Coene, who also heads Belgium’s central bank.

It would only lead to the ECB taking on the whole public debt of Spain and Italy onto its balance sheet.

That would in turn weaken the ECB and do nothing to resolve the underlying problems,” he was quoted as saying.

Coene told the newspapers that the central bank’s experience a year ago demonstrates why the ECB should remain reluctant to step in.

“We haven’t forgotten what happened in August of last year: We bought Italian bonds and right after that the Italian government reneged on its pledges,” he was quoted as saying.

“The conclusion is clear: When you take away the market pressure, you take away the pressure on politicians to act.”

Spanish two-year yields climbed yesterday to the highest level in a week amid speculation an ECB plan to buy the debt of so-called peripheral nations won’t be enough to stem the financial crisis.
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Offline Letsbereal

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Italy's Latest Record Debt Load: Bigger, Faster, More
« Reply #71 on: August 13, 2012, 11:33:44 AM »
Italy's Latest Record Debt Load: Bigger, Faster, More
13 August 2012
, by Tyler Durden  (MarketWatch)
http://www.zerohedge.com/news/italys-latest-record-debt-load-bigger-faster-more

Italy just announced its all-time record high general government debt load at €1.973 trillion.

What is perhaps most stunning, given all the talk of austerity, cutting back, reforms, and change is that the size of this debt is growing at an ever-increasing pace that is simply stunning.

Pre-Euro (1999), Italy's debt was growing at a rate of just less than €2 billion per month; in the eight years from then until the crisis in 2008,

Italy's pace of debt growth (fostered we are sure by the convergent cheapness of funding and their immutable belief in invincibility) almost perfectly doubled to €3.8bn per month.

Since 2008, and the onset of excess Keynesian ridicule we assume, Italy's debt load has grown at a stunning pace of €6.4 billion per month and perhaps most incredible; however,

the last nine-months (since the peak 'peak' of the crisis in September of last year) has seen the pace of debt-load growth surge to €9.5 billion per month.

Sustainable levels of exponential debt growth - sure!
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Offline Valerius

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Re: Italy's Latest Record Debt Load: Bigger, Faster, More
« Reply #72 on: August 13, 2012, 11:50:11 AM »
Begs the question debt to whom for what?
"No man can put a chain about the ankle of his fellow man without at last finding the other end fastened about his own neck."  -Frederick Douglass

Offline Letsbereal

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Re: Italy's Latest Record Debt Load: Bigger, Faster, More
« Reply #73 on: August 13, 2012, 12:26:54 PM »
Begs the question debt to whom for what?

The rent on the debt has to be payed by the taxpayer.

If these various debts 'roll over' this also has to be payed by the taxpayer or is payed by creating even more debt.

Creating debt is steeling taxpayers money from future generations.
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Offline shipgeek

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Re: Italy's Latest Record Debt Load: Bigger, Faster, More
« Reply #74 on: August 13, 2012, 12:35:14 PM »
They chose the EUSSR super-technocrat Mario Monti as the Italian PM thinking he was going to do miracles.

He's been in charge long time already - they can't blame the debt fail on Berlusconi anymore. He's been long gone.

 ;D

E MARE LIBERTAS

Offline Letsbereal

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450,000 Businesses Shut Down in Italy; Non-Performing Loans Jump 15.3%, Write-Downs 21.6%
25 November 2012
, by Mike Shedlock (MISH'S Global Economic Trend Analysis)
http://globaleconomicanalysis.blogspot.nl/2012/11/450000-businesses-shut-down-in-italy.html
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Offline Letsbereal

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Italian debt hits record high of $3.2 trillion
« Reply #76 on: December 14, 2012, 10:18:10 PM »
Italian debt hits record high of $3.2 trillion
14 December 2012
, Milan (AP)
http://www.todayonline.com/World/EDC121214-0000144/Italian-debt-hits-record-high-of-S$3,2-trillion

Italian public debt has swelled to its highest level ever, reaching €2.014 trillion ($3.2 trillion) in October.

The Bank of Italy on Friday said that the debt pile has risen by 3.7% since January 2012, when it was €1.94 trillion.

The Italian economy, the third-largest among the 17 European Union countries that use the euro, is in recession as the government has enacted spending cuts and tax hikes to get a handle on its debts.

Italy has the second-highest debt level as a percentage of its GDP in the eurozone, behind only Greece.

Italy's borrowing costs have been kept down in recent months, thanks mainly to a European aid program it has the option to tap, despite political uncertainty raised by Silvio Berlusconi's possible return to politics.
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Offline Letsbereal

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Italy Needs €9 Billion for Deficit Goal, Official Says
« Reply #77 on: January 20, 2013, 05:11:48 AM »
Italy Needs 9 Billion Euros for Deficit Goal, Official Says
18 January 2013
, by Chiara Vasarri & Flavia Rotondi (Bloomberg)
http://www.bloomberg.com/news/2013-01-18/italy-needs-9-billion-euros-to-meet-deficit-goal-official-says.html

Italy may need at least €9 billion ($12 billion) in additional budget measures in 2013 to meet its deficit targets as the worsening recession hurts tax revenue and fuels unemployment costs, a Finance Ministry official said.

Italy will need to find €8 billion to finance jobless schemes and faces a €6 billion revenue shortfall from value- added and gambling taxes, Finance Undersecretary Gianfranco Polillo said in an interview in Rome.

That will be partly offset by a bigger-than-expected take from a new property tax and falling debt financing costs that will add €5 billion in resources.

The Bank of Italy today cut its forecast for the economy, predicting a contraction of 1% this year compared to a previous forecast of a 0.2% drop,

saying the global slowdown and weak domestic demand were choking growth.

That will make it harder for Italy to meet its goal of a 2013 deficit of 1.6% of GDP, he said.

This year “there will be some spillover from a bigger deficit in 2012 stemming from the fact that GDP has slumped and we will have less coming in from VAT and a bit less from gaming,

which we will only be able to partly compensate for with the increase in the property tax,” he said.

Structural Goal

Italy is on track to meet its goal to balance the budget in structural terms, or excluding the effects of the recession, this year, he said.

The government probably missed its overall deficit target of 2.6% of GDP last year, Polillo said.

The Bank of Italy said today the deficit in 2012 was about 3%, a prediction Polillo said was reasonable.

Italy has three possibilities to fill the €9 billion gap, Polillo said.

The next government can cut public spending, seek more revenue through fighting tax evasion or just let the deficit in 2013 run above 2% of GDP.

Italy holds general elections on Feb. 24-25.

Introducing new austerity measures, such as an increase of the value-added tax rate, would further depress the economy, Polillo said.

That “would have the double effect of increasing the tax burden and further hurt consumer spending,” he said.

Extraordinary measures, such as the sale of public assets, are needed to cut Italy’s €2 trillion debt, Polillo said.

“There’s no alternative,” he said.
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Offline Letsbereal

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Merkel’s Euro Doctrine Threatened as Italians Snub Austerity
« Reply #78 on: February 26, 2013, 05:26:30 PM »
Merkel’s Euro Doctrine Threatened as Italians Snub Austerity
26 February 2013
, by James G. Neuger (Bloomberg)
http://www.bloomberg.com/news/2013-02-26/merkel-s-euro-doctrine-threatened-as-italians-reject-austerity.html

Excerpt:

Silvio Berlusconi may have the last laugh -- at Europe’s expense.

Once the subject of German Chancellor Angela Merkel’s barely suppressed titters, the former Italian leader roared back from the political wasteland in yesterday’s election, blocking the formation of a new Italian government and fracturing the euro zone’s brittle newfound stability.

The billionaire’s resurrection coupled with the emergence of comedian-turned-politician Beppe Grillo risked igniting anti- austerity forces in southern Europe’s depressed economies,

overturning the German-led crisis-management formula and renewing doubts about popular backing for the euro.

“This is a catastrophe for Europe,” Luxembourg Foreign Minister Jean Asselborn said in a telephone interview.

“There are a lot of people in Italy, in Europe, who think that Europe is to blame for Italy’s problems.

Second, I have very serious doubts that populism would make it possible to find a solution to create stability in Italy.”

Bonds of the countries most vulnerable to an investor exodus tumbled after the vote.

Ten-year Italian yields rose 36 basis points to 4.85% at 4:45 p.m. in Rome, widening the risk premium against German debt to a three-month high of 338 basis points.
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Offline Letsbereal

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Europe's Scariest Chart Update: Italy Now Worse Than Portugal
« Reply #79 on: March 01, 2013, 11:28:58 PM »
Europe's Scariest Chart Update: Italy Now Worse Than Portugal
1 March 2013
, by Tyler Durden (Zero Hedge)
http://www.zerohedge.com/news/2013-03-01/europes-scariest-chart-update-italy-now-worse-portugal

For the first time in two years, Italy's youth unemployment rate is now higher than Portugal's at a staggering 38.7% (which is where Greece was just two years ago).

Apart from Germany (which fell from 8.0% to 7.9%), every other nation saw youth unemployment rates rise with a record 24.2% of European youth unemployed.

Greece (59.4%) and Spain (55.5%) remain the most concerning as we noted in the past, austerity sounds straightforward as a policy, until the consequences bite in terms of social unrest.

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