http://globaleconomicanalysis.blogspot.com/2013/03/italian-president-giorgio-napolitano.html
Months of Pressure on Bersani and Silvio Berlusconi
The ECB clearly does not want to take a chance that Beppe Grillio's Five Star Movement will win the next election, so the pressure is on by the ECB for a different result.
Bloomberg reports Napolitano Names Advisers in Renewed Push for Italian Deal
If Napolitano does manage to scrape together a coalition, it will not last long. Berlusconi is angling for the right to name the next president to form a government. However, once that is done, he will no longer need the coalition and will be happy to have elections free from worry over prosecution and also with rule changes more favorable to his party.
Mike "Mish" Shedlock
and....
http://www.zerohedge.com/news/2013-03-30/25-lessons-cyprus-deal
( Lessons learned from Cyprus - for those that follow the road well traveled , understand the road does not follow you - no matter how important you may think you or country might be ..... )
Submitted by Tyler Durden on 03/30/2013 15:10 -0400
May the farce be with you Italy..............
http://www.zerohedge.com/news/2013-03-30/whos-next-italys-monte-paschi-admits-billions-deposit-outflows
Submitted by Tyler Durden on 03/30/2013 16:05 -0400
a few billion euros ..... just a flesh wound......
http://www.washingtonpost.com/business/italy-president-seeks-outside-counsel-to-end-political-gridlock-preventing-formation-of-govt/2013/03/30/23df1f10-993c-11e2-b5b4-b63027b499de_story.html
Italy president seeks outside counsel to end political gridlock preventing formation of govt
ROME — Italy’s president on Saturday named 10 outside experts — including a central banker, a constitutional expert, and the head of Italy’s statistics agency — to try to help end the political gridlock that has prevented the formation of a government more than a month after inconclusive elections.
http://www.france24.com/en/20130329-italy-political-deadlock-bersani-government-scenarios-election
Sunday, March 31, 2013 12:58 PM
Italian President Giorgio Napolitano Denies He Is Stepping Down After Phone Call From ECB President
Whether or not Italian President Giorgio Napolitano intended to step down or it was just a rumor, following ECB President Mario Draghi phone call, Napolitano denies resignation reports.
Napolitano pledged on Saturday that he would stay in office until the end of his term on May 15 following reports that he planned to step down to break the deadlock created by last month's election, which left no party able to form a government.
Months of Pressure on Bersani and Silvio Berlusconi
The ECB clearly does not want to take a chance that Beppe Grillio's Five Star Movement will win the next election, so the pressure is on by the ECB for a different result.
Bloomberg reports Napolitano Names Advisers in Renewed Push for Italian Deal
Italian President Giorgio Napolitano renewed his push to forge a government from the country’s divided parliament by drafting advisers from two of the top three political forces.Coalition Won't Last
Members of the parliamentary coalitions headed by Pier Luigi Bersani and ex-Prime Minister Silvio Berlusconi were among the 10 men selected, according to an e-mail sent late yesterday by Napolitano’s office. Civil servants, a former politician, a retired judge and a central banker rounded out the two lists. Beppe Grillo’s Five Star Movement, the third-largest group, had no lawmakers included.
Grillo, an ex-comic who characterized his party’s mission as the French Revolution without the guillotine, criticized Napolitano’s appointment of advisers in a blog posting today.
Italy “doesn’t need ‘caretakers of democracy,’ but rather to make its parliament function better and quickly,” Grillo said. “The country doesn’t need mysterious negotiators or facilitators of the caliber of Violante, the grand master of backroom deals, to cite just one, to act as a group of wise men.”
Violante, a former speaker of the lower house of parliament, didn’t respond to a request via his website for comment.
If Napolitano does manage to scrape together a coalition, it will not last long. Berlusconi is angling for the right to name the next president to form a government. However, once that is done, he will no longer need the coalition and will be happy to have elections free from worry over prosecution and also with rule changes more favorable to his party.
Mike "Mish" Shedlock
and....
http://www.zerohedge.com/news/2013-03-30/25-lessons-cyprus-deal
( Lessons learned from Cyprus - for those that follow the road well traveled , understand the road does not follow you - no matter how important you may think you or country might be ..... )
25 Lessons From The Cyprus 'Deal'
There are many lessons and implications from the Cypriot crisis (we list 25 here). Among the most important is that conditionality is back, energetically, which is very important when considering the circumstances under which other, bigger, countries might access ESM or OMT. We believe, like BNP's James Mortimer-Lee, thatthe market has been too complacent, seeing OMT and “whatever it takes” as unconditional – that’s wrong. A second lesson is that a harsher line is being taken by the core. This partly reflects more effective firewalls, so that core countries are more willing to “burn” the private sector, where doing so does not represent a serious systemic risk. Cyprus may not be a template, but we have seen enough to glimpse what the new pan eurozone bank resolution system could look like. Risk for certain classes of stakeholders in banks has risen. We are a long way from seeing the eurozone crisis resolved.
Via Paul Mortimer-Lee, BNP Paribas,
There are many lessons to be learned from the Cyprus bailout, and plenty of implications for how things may develop in the future. We list 25 here, but there are more.
Lesson 1: Do not underestimate the ability of the eurozone to do the right thing – after all the alternatives are exhausted;Lesson 2: Eleventh hour deals can often lead to mistakes and have unintended consequences.The decision to haircut depositors under EUR 100k was a pothole the Troika fell into. It questioned the integrity of the EUR 100k deposit guarantee;Lesson 3: The disappearance of Mario Monti from the scene has reduced the influence the South has on decisions about the future of the euro;Lesson 4: There appears to bebailout fatigue in Germany, the Netherlands and Finland. Mrs Merkel is prepared to be tougher ahead of the election than many thought;Lesson 5: The new Chair of the Eurogroup, Mr Dijsselbloem, seems to be a hardliner compared with his predecessor, Mr Junker from Luxembourg;Lesson 6: Mr Dijsselbloem can sometimes be too outspoken and not sufficiently diplomatic. Beware future gaffes;Lesson 7: The ECB is prepared to use the ultimate weapon – “no more money for your banks”. This is not exactly ejecting a country from the eurozone, but would amount to making it very difficult for it to stay in;Lesson 8: Such a threat hasprofound political implicationsand is above even Draghi’s pay grade, so must have the backing of Mrs Merkel and others;Lesson 9: When a problem is not seen to be systemic, there will be reluctance in Germany and like-minded countries to use taxpayers’ money to solve it. Cost/benefit balancing will ensure each case really is “unique”;Lesson 10: This puts private interests at greater risk in absorbing the financial pain, or at least the first tranche of it, especially in small non-systemic countries;Lesson 11: “They” (the Troika) will seek to use private money where they can to limit the size of public sector involvement.While each case is unique, the principles are the same. In Greece, government bondholders took the pain; in Cyprus large depositors. Each case is “unique” but there may well be further “unique cases”, each different in its own special way;Lesson 12: When it comes to resolving banks’ difficulties there is a hierarchy of who will take the pain: shareholders first, then junior bondholders, then senior bondholders, then large depositors, then the state, then foreign taxpayers;Lesson 13: How much pain the private sector will take depends on whether or not a problem is seen as “systemic” or not. The less systemic it is, the more private interests will suffer;Lesson 14: Some countries see firewalls as adequate. So they are now prepared to “burn” stakeholders who were previously protected;Lesson 15: The probability of direct bank recapitalisation by the European Stability Mechanism (ESM) has gone down;Lesson 16: Moral hazard has been reduced;Lesson 17: We crossed a Rubicon of sorts when capital controls were introduced in Cyprus. A Cypriot bank euro is not freely exchangeable with German bank euro. The euro area became more fragmented;Lesson 18: It may be more difficult to remove capital controls than expected;Lesson 19: A precedent for the use of capital controls has been set that can speed up capital flight in a crisis, raising the probability of their subsequent re-use;Lesson 20: It would be surprising if larger depositors were not making defensive moves out of weak banks and banking systems. Watch the scale of ECB MROs and ELA operations;Lesson 21: The Cypriot economy will see a major recession;Lesson 22: The Cypriot programme will, consequently, prove to be too optimistic, there will have to be another;Lesson 23: While Draghi has bought time, the fundamental problems in the eurozone are a long way from being solved, and can come back to haunt markets;Lesson 24: Do not expect Russia to take the loss with a feeble protest – there will be consequences;Lesson 25: Conditionality is very important to the core countries. There is no such thing as a conditions-free bailout. There are no blank cheques and no free access to Outright Monetary Transactions (OMT) or ESM. There is no such thing as a free lunch (unless not having a free lunch threatens the system).
May the farce be with you Italy..............
http://www.zerohedge.com/news/2013-03-30/whos-next-italys-monte-paschi-admits-billions-deposit-outflows
Who's Next? Italy's Monte Paschi Admits Billions In Deposit Outflows
It appears, given news from Italy today, that European depositors are increasingly coming to the realization that deposits in their local bank are not 'safe' places to put their spare cash, but are in fact loans to extremely leveraged businesses. In a somewhat wishy-washy, 'hide-the-truth'-like statement onMonte dei Paschi's website, the CEO admits to, "the withdrawal of several billion in deposits." Of course, the reasons why these depositors withdrew their capital from the oldest bank in the world will never be known though of course he blames it on "reputational damage" from their derivative cheating scandal. Unsurprisingly, as Reuters notes, the CEO declined to give a forecast on the level of deposits at the end of the first quarter of 2013; no wonder given the bank just doubled its expectations for bad loans and the 'Cypriot Solution' dangling over uninsured depositor hordes.
BMPS Capital Structure...
Customers' deposits at Italian bank Monte dei Paschi fell by "a few billion euros" ... the bank said in a document posted on its web site on Saturday....But it has yet to make clear what impact the scandal itself had on its first quarter results."The illicit nature of the derivatives trades and their consequence on the bank's assets exposed the bank to reputational damage that was immediately translated into...the withdrawal of a few billion euros in deposits," the bank said in a document for shareholders attending its April 29 meeting....But he declined to give a forecast on the level of deposits at the end of the first quarter of 2013 or to indicate the outlook for net interest income and loan loss provisions.
a few billion euros ..... just a flesh wound......
GUIDE
http://www.washingtonpost.com/business/italy-president-seeks-outside-counsel-to-end-political-gridlock-preventing-formation-of-govt/2013/03/30/23df1f10-993c-11e2-b5b4-b63027b499de_story.html
Italy president seeks outside counsel to end political gridlock preventing formation of govt
ROME — Italy’s president on Saturday named 10 outside experts — including a central banker, a constitutional expert, and the head of Italy’s statistics agency — to try to help end the political gridlock that has prevented the formation of a government more than a month after inconclusive elections.
The 10 “wise men” will come up with proposals over the next week touching on “institutional, socio-economic and European” measures in hope of reaching a consensus across Italy’s bitterly divided political blocs on how to move forward, the president’s office said in a statement.
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President Giorgio Napolitano’s decision to look to outsiders came after Pier Luigi Bersani, whom Napolitano had tapped to try to form a government, announced Thursday he had failed to obtain the consensus necessary.
Italy’s Feb. 24-25 elections ended in a three-way gridlock with Bersani’s center-left forces, former Premier Silvio Berlusconi’s center-right forces and the anti-establishment protest movement founded by comic-turned-political leader Beppe Grillo.
Analysts say Napolitano will most likely ask a figure outside of partisan politics to put together a government that can last long enough to enact economic and electoral reform before new elections are called.
For now, Mario Monti remains Italy’s caretaker premier. In his announcement Saturday, Napolitano said the Monti government was still very much “operative” and would be taking urgent economic measures soon.
The outside experts include Enrico Giovannini, president of Italy’s statistics agency, Istat; Valerio Onida, who was a judge on Italy’s constitutional court; and Salvatore Rossi, deputy director general of the Bank of Italy. Politicians and heads of parliament commissions are also included in the group.
http://www.france24.com/en/20130329-italy-political-deadlock-bersani-government-scenarios-election
Italy is at an impasse again and this time, it’s serious.
A day after leftist Pier Luigi Bersani threw in the towel after failing to form a new government; Italian politicians began a new round of talks Friday to try to hammer together a coalition following the February 24-25 elections, which failed to produce an outright winner.
As tempers rose, nerves frayed and talks continued, the political rhetoric in Italy sounded more exhausted than incensed.
While Mario Monti’s technocratic government remains in office until a new one is formed, the veteran economist has publicly declared that he “can’t wait to leave office”.
For his part, Bersani recently said “only a mentally ill person” could have “a burning desire to govern right now.” He made the comment on Wednesday after meeting senior members of Five Star, a protest movement led by Beppe Grillo, a former comedian.
Grillo himself has made clear the movement will not back any government led by either the centre-left or centre-right and in a blog post earlier this week, the charismatic comedian called mainstream Italian politicians such as Silvio Berlusconi and Bersani "old whoremongers".
FRANCE 24 spoke to Alessandro Grandesso - journalist at Italy’s Radio Monte Carlo and a former Paris correspondent for the Corriere della Sera, Italy’s leading newspaper - to take stock of the situation in the eurozone’s third-largest economy and to consider likely political scenarios.
FRANCE 24: With the failure of talks led by Pier Luigi Bersani, what are the possible scenarios in Rome?
Alessandro Grandesso: Experts, politicians, journalists...currently everybody in Italy wants to offer their opinion since the country seems stuck in a catastrophic mess. We do not know who to listen to, or who to believe. But there are three likely scenarios emerging:
1. Charge someone other than Bersani with forming a majority coalition. Of course, he or she may face the same difficulties, but we can perhaps hope that given the current dramatic situation, some parties will agree to take action to make things happen.
2. New elections - immediately. But the complex electoral law could lead to the same impasse. In addition, the Constitution prevents President Giorgio Napolitano from dissolving parliament in the last months of his term, even if the language and terms in the Constitution are rather vague, allowing a loose interpretation of the text.
3. Form a transitional government until new elections. This is the solution that seems the most logical. This would entail forming a technocratic government – like that of Mario Monti’s – that would restore political equilibrium until the next election. The problem is, this technocratic type of government is particularly unpopular with Italians, judging by Monti’s crushing defeat in the polls. [Monti won only 10% of the votes in the February election].
FRANCE 24: What happens to Pier Luigi Bersani?
Alessandro Grandesso: As the leader of a party without an outright majority, he’s in a very delicate situation. He won the elections - but with a very low margin. So, I think Pier Luigi Bersani will have to confront Matteo Renzi, the mayor of Florence who lost the December 2012 primaries to Bersani. In recent days, Renzi has returned to the media spotlight. He could replace Bersani as a candidate of the leftist coalition in the event of new elections.
FRANCE 24: What about Beppe Grillo? What role is he playing?
Alessandro Grandesso: We really don’t understand what he wants. He does not have a really defined role in the Italian political landscape - except as the leader of a movement that is not a party. The fact that the Five Star movement does not have a conventional structure allows Grillo get involved in politics or to remain outside if the situation does not suit him. And that’s been the case so far since he has refused any alliance with Berlusconi or Bersani. The question now is who will he join forces with. There are several names around, but once again, nothing’s concrete as yet.
FRANCE 24: Who can succeed Giorgio Napolitano as president of the republic?
Alessandro Grandesso: The situation is way too confusing right now. It was believed for a moment that Berlusconi would be a candidate, but he has denied it. I think the immediate priority is not to find Napolitano’s successor, but to reassure the markets – and that’s urgent because you don’t want to sink into the same sort of crisis as we did in 2011.
A big part of the economic stagnation in France was caused by the implementation of the country's own version of the "fiscal cliff".
As the French recession deepens, it is dragging down economic activity indicators for the Eurozone as a whole.
Moreover, the current crisis in Cyprus is expected to reverberate across Europe. In spite of being a tiny portion of the EMU's GDP, the psychological impact of Cyprus' botched "bailout" on the area consumers (and possibly banks) is expected to be material. The markets have in fact begun pricing in worsening economic slump in the Eurozone, particularly relative to the US. The recent decline in the euro has been relentless.
The confluence of Cyprus events and the recession in France and elsewhere across the area has prompted JPMorgan economists to downgrade their expectations for the Eurozone 2013 GDP growth - once again significantly below consensus. Europe just can't catch a break.
A day after leftist Pier Luigi Bersani threw in the towel after failing to form a new government; Italian politicians began a new round of talks Friday to try to hammer together a coalition following the February 24-25 elections, which failed to produce an outright winner.
As tempers rose, nerves frayed and talks continued, the political rhetoric in Italy sounded more exhausted than incensed.
While Mario Monti’s technocratic government remains in office until a new one is formed, the veteran economist has publicly declared that he “can’t wait to leave office”.
For his part, Bersani recently said “only a mentally ill person” could have “a burning desire to govern right now.” He made the comment on Wednesday after meeting senior members of Five Star, a protest movement led by Beppe Grillo, a former comedian.
Grillo himself has made clear the movement will not back any government led by either the centre-left or centre-right and in a blog post earlier this week, the charismatic comedian called mainstream Italian politicians such as Silvio Berlusconi and Bersani "old whoremongers".
FRANCE 24 spoke to Alessandro Grandesso - journalist at Italy’s Radio Monte Carlo and a former Paris correspondent for the Corriere della Sera, Italy’s leading newspaper - to take stock of the situation in the eurozone’s third-largest economy and to consider likely political scenarios.
FRANCE 24: With the failure of talks led by Pier Luigi Bersani, what are the possible scenarios in Rome?
Alessandro Grandesso: Experts, politicians, journalists...currently everybody in Italy wants to offer their opinion since the country seems stuck in a catastrophic mess. We do not know who to listen to, or who to believe. But there are three likely scenarios emerging:
1. Charge someone other than Bersani with forming a majority coalition. Of course, he or she may face the same difficulties, but we can perhaps hope that given the current dramatic situation, some parties will agree to take action to make things happen.
2. New elections - immediately. But the complex electoral law could lead to the same impasse. In addition, the Constitution prevents President Giorgio Napolitano from dissolving parliament in the last months of his term, even if the language and terms in the Constitution are rather vague, allowing a loose interpretation of the text.
3. Form a transitional government until new elections. This is the solution that seems the most logical. This would entail forming a technocratic government – like that of Mario Monti’s – that would restore political equilibrium until the next election. The problem is, this technocratic type of government is particularly unpopular with Italians, judging by Monti’s crushing defeat in the polls. [Monti won only 10% of the votes in the February election].
FRANCE 24: What happens to Pier Luigi Bersani?
Alessandro Grandesso: As the leader of a party without an outright majority, he’s in a very delicate situation. He won the elections - but with a very low margin. So, I think Pier Luigi Bersani will have to confront Matteo Renzi, the mayor of Florence who lost the December 2012 primaries to Bersani. In recent days, Renzi has returned to the media spotlight. He could replace Bersani as a candidate of the leftist coalition in the event of new elections.
FRANCE 24: What about Beppe Grillo? What role is he playing?
Alessandro Grandesso: We really don’t understand what he wants. He does not have a really defined role in the Italian political landscape - except as the leader of a movement that is not a party. The fact that the Five Star movement does not have a conventional structure allows Grillo get involved in politics or to remain outside if the situation does not suit him. And that’s been the case so far since he has refused any alliance with Berlusconi or Bersani. The question now is who will he join forces with. There are several names around, but once again, nothing’s concrete as yet.
FRANCE 24: Who can succeed Giorgio Napolitano as president of the republic?
Alessandro Grandesso: The situation is way too confusing right now. It was believed for a moment that Berlusconi would be a candidate, but he has denied it. I think the immediate priority is not to find Napolitano’s successor, but to reassure the markets – and that’s urgent because you don’t want to sink into the same sort of crisis as we did in 2011.
FRIDAY, MARCH 29, 2013
French consumer recession worse than Italy's; Euro area economy in trouble
As discussed earlier (see post) the French economy continues to struggle. The nation's consumer recession is now thought to be worse than Italy's.
Markit (Trevor Balchin): - “France has overtaken Italy as having the worst performing retail sector of the three largest euro area economies. Sales fell at a survey-record pace, as did employment. Italy registered another steep drop in sales, while German retailers witnessed a flat trend in March.”French economic output data suggests that the GDP growth - which has been lagging the Output PMI Index - will be in the red for a good portion of 2013.
A big part of the economic stagnation in France was caused by the implementation of the country's own version of the "fiscal cliff".
WSJ: - Mr. Hollande's government responded to the weaker economy in 2012 by raising taxes by €7 billion ($9 billion) to try to limit the damage to public finances. If the government hadn't done this, along with a smaller effort to curb public spending, the deficit would have increased above 5.5% of output, finance minister Pierre Moscovici said in a radio interview Friday. Another €20 billion of taxes have since been introduced for 2013.Retail sales indicator in France now points to conditions that are worse than during the 2008 recession.
But there is now evidence that tax increases are hurting the economy with Insee reporting that consumer spending power fell last year for the first time since 1984. Households, who typically make up well over half of GDP, cut their spending for the second month in a row in February and haven't spent as little since June 2010, Friday's data showed.
 |
| Source: Markit |
As the French recession deepens, it is dragging down economic activity indicators for the Eurozone as a whole.
 |
| Source: Markit |
Moreover, the current crisis in Cyprus is expected to reverberate across Europe. In spite of being a tiny portion of the EMU's GDP, the psychological impact of Cyprus' botched "bailout" on the area consumers (and possibly banks) is expected to be material. The markets have in fact begun pricing in worsening economic slump in the Eurozone, particularly relative to the US. The recent decline in the euro has been relentless.
 |
| EUR/USD (source: Investing.com) |
The confluence of Cyprus events and the recession in France and elsewhere across the area has prompted JPMorgan economists to downgrade their expectations for the Eurozone 2013 GDP growth - once again significantly below consensus. Europe just can't catch a break.
 |
| Source: JPMorgan |
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