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Posts Tagged ‘Italy’


Commenting on today’s sheer market chaos as the US and UK return from holiday, Bloomberg writes that “fixed-income markets have descended into panic amid mounting concern over the risk of Italy leaving the euro or leading to its break-up” and while Italy is suffering the biggest losses in peripheral debt, core bonds and Treasuries are spiking higher.

For those who stayed away from market news over the holiday weekend, this is what happened and why we are here today: Italy PM-designate Conte gave up on efforts of forming a government after Italian President Mattarella rejected Eurosceptic Paolo Savona for the Economy Minister position because the appointment would have “alarmed markets and investors, Italians and foreigners” (yes, very ironic in retrospect, although just as we predicted would happen). Mattarella then summoned former-IMF senior director Cottarelli to meet in a move viewed by some as laying the groundwork for a technocratic government. Forza Italia said they would not support this government, and 5SM and League set their sights on the now highly likely new elections (touted from September 9th). Both 5SM and League saying they will evaluate their coalition in these new elections.

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‘A scandal-ridden Catholic diocese in Italy where priests posted naked photos of themselves on gay websites, raided church coffers and sexually harassed parishioners is to be investigated by a special envoy to Pope Francis.

The Pope reportedly intends to send an ‘apostolic administrator’ to assess allegations that the diocese of Albenga-Imperia, in the Liguria region of northern Italy, has hosted a string of ‘playboy priests’ moon-lighting as barmen, stealing parish funds and getting tattooed.’

Read more: Pope Francis to investigate ‘playboy priests’ who posed naked online in scandal-hit disocese

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AFRICOM builds up military bases in Italy for small-scale “secret wars” in Africa

The U.S. deployment of 200 Marines to a naval base in Sicily for possible operations in Libya, a short hop across the Mediterranean, underlines how the Americans have been building a network of bases in Italy as launch pads for military interventions in Africa and the Mideast.

The signs are that 20 years after the American military’s first, and costly, encounter with Muslim militants in Mogadishu, Somalia, U.S. operations in Africa are growing as the Islamist threat expands.

 

Another key factor is U.S. President Barack Obama‘s switch in his counter-terror strategy from drone strikes against al-Qaida to pinpoint raids by small Special Forces teams, as seen in Somalia and Libya Oct. 5.

These were triggered by Islamist violence in both countries, including the Sept. 21 seizure of the Westgate shopping mall inl Nairobi, capital of Kenya, by fighters of Somalia’s al-Qaida affiliate, al-Shabaab, that left at least 67 people dead.

The U.S. SEAL Team 6 seaborne raid on the Somali coastal town of Barawe to capture al-Shabaab mastermind Abdulkadir Mohamed Abdulkadir,a Kenyan of Somalia origin, ran into heavier than expected resistance and had to be aborted.

But the U.S. Army’s Delta Force had more success in its raid on Tripoli when they grabbed longtime al-Qaida fugitive Nazih Abdul-Hamed al-Ruqai, aka Abu Anas al-Libi, indicted by a U.S. court in 2000 for the August 1988 bombings of U.S. embassies in Nairobi and Dar es Salaam, Tanzania, that killed 224 people.

These raids reflect a U.S. move away from the kind of risk-averse operations the Americans have been mounting with missile-firing drones to on-the-ground raids against high-value targets.

The abhorrence of risk stemmed largely from of the psychological fallout over the October 1993 operation in Mogadishu to capture Somali warlord Mohamed Farah Aidid that went badly wrong and led to the downing of two U.S. helicopters and the deaths of 18 Rangers and Special Forces troopers.

U.S. President Barack Obama’s visit to Africa in June-July was widely seen as evidence of the White House’s broader foreign policy objectives which have included an expansion of U.S. military operations across Africa.

Many of these involve small-scale “secret wars” against Islamists, mainly linked to al-Qaida and often carried out under the aegis of the U.S. Africa Command established in 2007.

“Both the number and complexity of U.S. military operations in Africa will continue to grow in the medium term,” observed Oxford Analytica.

“Given the relatively high impact contribution they make to Washington’s strategic goals, such military operations will also increasingly encroach on domains traditionally associated with development and diplomacy.

“However, they will also increasingly commit the United States to an ‘intervention-led’ foreign policy in Africa.”

Although Africom and the U.S. Joint Special Operations Command claim they have a small footprint in Africa, over the last year or so they’ve been increasingly active in building up a U.S. military presence — and especially reach — across the continent.

The United States has only one official base in Africa, the counter-terrorism facility at Camp Lemonnier, a former French Foreign Legion base in Djibouti, East Africa, where Special Forces, strike jets and armed unmanned aerial vehicles are based.

But small units are deployed across Africa. Meantime, the Americans have established a network of bases in Italy, involving a significant manpower shift southward from the old Cold War bastion of Germany.

The Marines moved to Italy from Spain this month are the vanguard of a larger force dubbed Special Purpose Marine Air-Ground Task Force-Crisis Response.

It was established after the Sept. 11, 2012, attack on the U.S. consulate in Benghazi, Libya, in which U.S. Ambassador Christopher Stevens and three other Americans were killed.

According to U.S. security specialist David Vine, the Pentagon has spent around $2 billion — and that’s just construction costs — “shifting its European center of gravity south from Germany” and transforming Italy “into a launching pad for future wars in Africa, the Middle East and beyond.”

The U.S. Marines are being moved to the Naval Air Station at Sigonella on Sicily, which will eventually have a force of 1,000 Marines with its main focus Libya, 100 miles across the Med.

Vines estimates there are now 13,000 U.S. troops in Italy at Sigonella and some 50 other facilities like Vicenza, a former Italian air force base near Venice, with the 173rd Infantry Brigade Combat Team (Airborne), a rapid response force.

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Ex-CIA officer: U.S. shielded higher-ups in kidnap case

–The official says she was used as a scapegoat following one of the Bush administration’s secret ‘extraordinary renditions.’

28 Jul 2013 A former CIA officer has broken the U.S. silence around the 2003 abduction of a radical Islamist cleric in Italy, charging that the agency inflated the threat the preacher posed and that the United States then allowed Italy to prosecute her and other Americans to shield President [sic] George W. Bush and other U.S. officials from responsibility for approving the operation. Confirming for the first time that she worked undercover for the CIA in Milan when the operation took place, Sabrina De Sousa provided new details about the “extraordinary rendition” that led to the only criminal prosecution stemming from the secret Bush regime’s rendition and detention program launched after the Sept. 11, 2001, terror attacks.

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[Forum Boario, Rome, Italy] (LOC)

[Forum Boario, Rome, Italy] (LOC) (Photo credit: The Library of Congress)

11 Signs That Italy Is Descending Into A Full-Blown Economic Depression

 

When you get into too much debt, really bad things start to happen.  Sadly, that is exactly what is happening to Italy right now.  Harsh austerity measures are causing the Italian economy to slow down even more than it was previously.  And yet even with all of the austerity measures, the Italian government just continues to rack up even more debt.  This is the exact same path that we watched Greece go down.

 

Austerity causes government revenues to drop which causes deficit reduction targets to be missed which causes even more austerity measures to become necessary.  But if Italy collapses economically, it is going to be a far bigger deal than what happened in Greece.  Italy is the ninth largest economy on the entire planet.  Actually, Italy used to be number eight, but now Russia has passed it.

 

If Italy continues to stumble, India and Canada will soon pass it as well.  It really is a tragedy to watch what is happening in Italy, because it really is a wonderful place.  When I was a child, my father was in the navy, and I got the opportunity to live there for a while.  It is a land of great weather, great food and great soccer.  The people are friendly and the culture is absolutely fascinating.  But now the nation is falling apart. 

 

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I’ve been following the Press coverage of Cyprus, the talking heads are saying that Cyprus is a manageable issue. Nothing to worry about at all.

I’m going to disagree with FTA and the TV folks. The chances of a bank run have never been higher. Tyler’s right. We’re looking at a black hole.

The “Other” scenario for Cyprus is a shell shocker. Forget the shareholders or the senior bond guys – they will end up with Dick’s hat band. Those Russians who were at risk of losing as much as 15% of their deposits – They get zip too. At best, they are getting an IOU. That IOU will have a value of 10 cents on the dollar.

Those small depositors that were going to get hit for an unfair loss of 6% now face a vacuum. Their bank statements may not reflect a loss of principal, but they won’t be able to withdraw a dime from those accounts. The local banks will remain closed, when they do reopen those deposits will be converted to some new currency. It’s possible that the new currency will be the Turkish Lira. You thought the poor folks in Cyprus were getting a bad deal on Monday? Wait till Friday before you pass judgement.

What happens if Cyprus does a “drop out” of the EU? That result immediately makes a lie of Mario Draghi’s words that the Euro was Uber-Ales. This is precisely what Super Mario said “would never happen”.

If Cyprus goes turtle and leaves the Euro, the credit spreads on peripherals will widen. This sets up a market “call” on the ECB. But remember, for Mario Draghi to give the market the “put” that it will demand, the government’s of Spain and Italy will be forced to get down on their knees and beg the gods in Brussels and Berlin for a helping hand. To do that means that they would have to have very harsh terms imposed on them. An IMF team would run the finances of the countries involved.

Given that there is zero chance that Italy and Spain will do the necessary begging, the value of the promised Draghi “put” is now zero.

There is a chance that something can be done to stop what looks like a slide into an abyss. Those chance are now well below 50-50. The markets/seers are calling for a soft landing, while at the same time that outcome is looking less and less likely. The markets seem poorly positioned for what could result in a crisis. And this story is running at hyper speed. That’ a very bad combo of events. Seat belts on – Impact Imminent!

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conclave, 2013, catholic, priest, calls, for, next, pope, to, be, gay,
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In a very strange update courtesy of PinkNews.com, which bills itself as Europe’s largest gay news service, a Catholic priest has apparently called on the conclave to elect a gay man to be the next pope, to avoid association with pedophilia.

Don Andrea Gallo, who is an outspoken advocate of LGBT right, had this to say to Italy’s Radio 24: “A homosexual pope would be a magnificent thing. The essence of the Gospel is that we are all God’s sons and daughters and we are all equal as God’s children. “The homosexual priest must be free to express his identity and his sexuality, because repression leads to pedophilia.”

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(Reuters) – Regardless of who wins next weekend’s parliamentary election, Italy’s long economic decline is likely to continue because the next government won’t be strong enough to pursue the tough reforms needed to make its economy competitive again.

Bankers, diplomats and industrialists in Rome and Milan despair at how Italians are shifting allegiances ahead of the February 24-25 vote to favor anti-establishment upstarts and show disgust with the established parties.

That makes it more likely that no bloc will have the political strength to tackle Italy’s deep-rooted economic crisis, which has made it Europe’s most sluggish large economy for the past two decades.

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International Tribunal calls on Napolitano to “not collude in criminality”, and announces global campaign to occupy Vatican property and launch human rights inquiry in Italy

Rome (9 am local time):

Pope Benedict, Joseph Ratzinger, has scheduled a meeting with Italian President Giorgio Napolitano for Saturday, February 23 to discuss securing protection and immunity from prosecution from the Italian government, according to Italian media sources.

Ratzinger’s meeting follows upon the apparent receipt by the Vatican of a diplomatic note from an undisclosed European government on February 4, stating its intention to issue an arrest warrant for Ratzinger, who resigned from his pontificate less than a week later.

In response to the February 23 meeting, the International Tribunal into Crimes of Church and State (ITCCS), through its field Secretary, Rev. Kevin Annett, has written to President Napolitano, asking him to refrain from assisting Ratzinger in evading justice.

The ITCCS letter states, in part,

“I need not remind you, Mr. President, that under international law and treaties that have been ratified by Italy, you and your government are forbidden from granting such protection to those like Joseph Ratzinger who have aided and abetted criminal actions, such as ordering Bishops and Cardinals in America and elsewhere to protect known child rapists among their clergy.

“Your obligation to the Vatican through the Lateran Treaty does not negate or nullify the requirements of these higher moral and international laws; nor does it require that you give any protection or immunity to a single individual like Joseph Ratzinger, especially after he has left his papal office.”

A copy of the complete text of the ITCCS letter follows.

In response to the documented crimes of child torture, trafficking and genocide linked to Pope Benedict and Vatican officials, the ITCCS will be sponsoring a series of ongoing protests and occupations of Roman Catholic churches and offices through its affiliates around the world beginning in Easter week, March 24-31, 2013, and continuing indefinitely.

These actions will accompany the legal efforts to bring Joseph Ratzinger and other Vatican officials to trial for their proven complicity in crimes against humanity and criminal conspiracy.

The Easter Reclamation Campaign will seize church property and assets to prevent their use by child raping priests, who are protected under Catholic canon law. Citizens have this right to defend their communities and children when the authorities refuse to do so, under international law.

Rev. Kevin Annett and an official delegation from the ITCCS Central Office will also be convening a formal human rights inquiry in Rome commencing the week of May 13, 2013, to consider further charges against the Vatican and its new Pope  for crimes against humanity and obstruction of justice.

Rev. Annett and his delegation will be working with organizations across Italy in this investigation. In 2009 and 2010, he held rallies outside the Vatican and met with media and human rights groups across Italy to charge the Vatican with the death of more than 50,000 aboriginal children in Canada.

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An Open Letter and Appeal to Giorgio Napolitano, President of the Republic of Italy from Rev. Kevin D. Annett, Secretary of the International Tribunal into Crimes of Church and State

14 February, 2013
Al Presdente della Repubblica Italiana Giorgio Napolitano
Presidenza della Repubblica
c/o Palazzo del Quirinale
00187 Roma
Italia
Dear President Napolitano,

On behalf of our Tribunal and people of conscience everywhere, and of the millions of victims of church abuse, I am making an appeal to you regarding your upcoming meeting with Joseph Ratzinger, who will retire soon as Pope Benedict, the Pontiff of the Church of Rome.

Our understanding is that, in the wake of pressure to have him resign his office because of his proven complicity in concealing child trafficking in his church and other crimes against humanity, Joseph Ratzinger is seeking the assistance of the Italian government in securing protection and immunity from legal prosecution.

I need not remind you, Mr. President, that under international law and treaties that have been ratified by Italy, you and your government are forbidden from granting such protection to those like Jospeh Ratzinger who have aided and abetted criminal actions, such as ordering Bishops and Cardinals in America and elsewhere to protect known child rapists among their clergy.

Your obligation to the Vatican through the Lateran Treaties does not negate or nullify the requirements of these higher moral and international laws; nor does it require that you give any protection or immunity to a single individual like Joseph Ratzinger, especially after he has left his papal office.

The need for you to abide by international law and not be seen to collude with Joseph Ratzinger is even more true when one considers the enormity of the crimes of which the Vatican and its highest officials are clearly guilty, according to considerable evidence gathered and documented by our Tribunal and other groups, and acknowledged by many governments.

In Canada alone, the Roman Catholic Church and its Vatican agents have been found guilty of responsibility for genocide and the deaths of at least 50,000 aboriginal child children in the Jesuit-initiated Indian residential school system, that operated until 1996.

In Ireland, more than 10,000 women suffered and were exploited in the Catholic-run Magdalene Laundries, where many of them died. Similar church-run institutions all over the world have caused enormous mortality, disease and ruination for millions of children. And yet the church has never been held accountable or prosecuted for these deaths and the theft of enormous wealth from entire nations.

With the recent initiative of at least one European government and a host of lawyers to bring Joseph Ratzinger and other church officials to trial for these crimes, we feel it is incumbent on you neither to assist nor to be seen to assist or condone the attempt by him to evade, obstruct or delay justice, lest you open yourself to a charge of being an accessory to a crime.

On behalf of our Tribunal and of many people who cannot speak, I call on you to stand on the law of nations and humanity, and offer no support or protection to Joseph Ratzinger or his accessories in their efforts to evade responsibility for their proven crimes.

I look forward to your reply, and to discussing this with you more when I visit your country in May with a human rights delegation to investigate this matter more closely.

Sincerely,

Kevin D. Annett, M.A., M.Div.

Secretary, The International Tribunal into Crimes of Church and State
Central Office, Brussels

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Just when you thought you had heard it all – from Spanish politicians to Italian bankers – along comes the CEO of Italy’s Finmeccanica. Giuseppe Orsi has been arrested for his alleged involvement in a bribery to ensure the Italian aerospace company got the order for Indian military helicopters in 2010. The $750 million deal, as reported by the WSJ, is now under investigation by the Indian defense minister but is not the first such ‘bribery scandal’ for Finmeccanica – whose CEO generously offered to step down if the Italian government (which owns 30.2% of the firm) asks him to. The share price plunged over 8% and was halted as analysts suggested – rather remarkably – that this might make it harder for Finmeccanica to compete for contracts in an already difficult market in which governments are cutting back on military spending. The sad truth appears to be that, whether pandemic or recently driven by a tougher economic environment, fraud runs deep – and its just a matter of time before it comes out, especially with the election so close.

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On February 24-25, Italy goes to the polls to elect its new parliament.

The big fears is that Berlusconi might do better than expected, increasing the risk of an ungovernable country.

This concern helped contribute to a massive walloping in the Italian stock market today. It was down 4.5%.

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Source: Zero Hedge

While little has been said in the mainstream western press about the ongoing fiasco surrounding Siena’s Banca Monte dei Pasci, Italy’s third largest bank and the world’s oldest which may get its third bailout in three years – or even be nationalized – as soon as today, for fears that it may break the thin veneer of “recovery” in the European financial system, the situation on the ground in Italy is getting more serious by the minute, and will have implications on both next month’s general election, on Mario Monti, on Silvio Berlusconi, on frontrunner for the Prime Minister post Pier Luigi Bersani, and reach as far up as the head of the ECB – Mario Draghi.

Several hours ago, on Saturday morning, the four-member board of the Bank of Italy – this time without its prior president Mario Draghi – met to consider the position of scandal-hit bank Monte dei Paschi di Siena and decide whether to authorize its request for 3.9 billion euros ($5.3 billion) of state loans.

As we reported previously, it has emerged over the past week that due to previously undisclosed derivative contracts first exposed by Bloomberg, the Siena bank has hid as much as $1 billion in losses. However as was explained in “Will The Super Goldman Mario Brothers Succeed In Covering Up The Latest Italian Bailout Scandal“, this discovery has far greater implications for both the bank’s future viability, as well as the implied credibility of both the Bank of Italy, and especially the man who headed it for five years before becoming head of the ECB (where he now demands the same supervisory authority over all European banks that he had in Italy, only to supposedly let countless derivative fiascos slip through his fingers).

As Zero Hedge first connected the dots, it is not so much a question of why BMPS engaged in a variety of derivative deals, of which only three have emerged so far and likely has many more on the books, but how or rather why, the then-Draghi led Bank of Italy allowed this to happen not once, not twice, but at least three times.

What the ultimate purpose of these deals was is still unclear and will likely become apparent eventually, however it will likely require the former Chairman of the bank, Giuseppe Mussari, who served as Chair from 2006 until April 2012, and who officially quit his post as Italy’s top banking lobbyist after today’s revelations, to testify. One person whom he may testify against is none other than current ECB head Mario Draghi, who just happened to be the head of the Bank of Italy from 2006 to 2011, or the entire period when Monte Paschi was engaging in what increasingly appears to have been fraudulent activity.

The next day, Retuers released “Draghi under fire over Monte Paschi derivatives scandal” continuing where we left off:

European Central Bank President Mario Draghi is facing criticism over a scandal involving loss-making derivatives trades made by troubled Italian lender Monte dei Paschi di Siena while he was Italy’s central bank governor.

Former Economy Minister Giulio Tremonti said in a tweet that it was “stupefying” that in his role as supervisor of Italy’s banking system Draghi had failed to discover or prevent the trades, which took place between 2006 and 2009.

An ECB spokeswoman declined to comment on the matter, saying that it was “the responsibility of national authorities.”

Current Economy Minister Vittorio Grilli avoided mentioning Draghi directly but stressed that it was not the government but the central bank that was responsible for bank supervision.

“It wasn’t us that did the controlling,” he told reporters. “On the checks, all I will say is that it is the responsibility of the Bank of Italy.”

Draghi saw no evil, smelled no evil, and certainly heard no evil:

On Wednesday the central bank tried to deflect any criticism, saying the nature of the trades had been “kept hidden” and were only recently divulged by new management appointed last year to turn the bank around.

Draghi, who has won wide plaudits as ECB president, left the Bank of Italy in late 2011 after a five-year stint as governor.

During this time he was also president of the Financial Stability Board, an international body charged with improving financial supervision and regulation.

The deals under scrutiny are the so-called “Alexandria” trade with Japanese bank Nomura, the “Santorini” trade with Deutsche Bank and a derivative called “Nota Italia”, with an unspecified bank.

One of the roots of its problems – the 2007 acquisition of smaller rival Antonveneta for a whopping 9 billion euros in cash just months before the beginning of the financial crisis – was also done under Draghi’s watch.

“One has to wonder what the Bank of Italy was doing given all the visits they’ve paid to Monte dei Paschi in recent months,” said a source close to the situation.

“If what they came here to look at was only the information publicly available in the bank’s financial statements, they could have done that from Rome.”

If only Mario Draghi could threaten to print countless lira, as he has effectively done as head of the ECB, to contain, for now, the European banking implosion, all would be well, however he can’t, and for now at least the problem is contained to Italy.

Of course, the Bank of Italy could punt, and effectively push the problem to the ECB’s plate, but the second that happens the fragile alliance between surreality and outright idiocy that has gripped European pundits and “analysts”, who claim Europe is fixed, when in reality nobody knows what the banks have on their balance sheets, or how many more trillions in liquidity they collectively need before their capitalization is fixed (that is a trick statement, of course, because excess liquidity will never, ever help with capitalization issues, as much as the ECB pretends otherwise) will crash and burn.

The problem for the ECB in coming to an indirect cash bailout of BMPS would be its own historical record from as recently as a month ago, when the second bailout of Monte Paschi was being finalized. From Reuters:

The terms of a state bailout scheme for Banca Monte dei Paschi di Siena, Italy’s third biggest lender, could pose more challenges to the bank’s performance, the European Central Bank said. The ECB, which will supervise euro zone’s lenders from March 2014, also said on Thursday it was told by the Italian government too late into the process about the details of the rescue.

Monte dei Paschi was forced to request state aid after failing to meet tougher capital requirements set by the European Banking Authority.

the ECB said issuing more bonds to pay for the coupon would add to the bank’s debt burden in an already difficult economic environment.

“This could pose further challenges to the bank’s performance in the near term and impair its capacity to redeem (the bonds) in a timely manner,” the ECB said in an opinion posted on its website. It said it would be preferable for the bank to issue new shares to the treasury to help pay interest – an option that is possible under the scheme but is not favored by the treasury or by the bank.

So the Italian head of the ECB was told by the Italian government headed by Monti, both former workers of Goldman Sachs about the terms of the second Monte Paschi bailout, “too late”? And upon hearing of said bailout, it was the ECB’s determination that a more feasible bailout structure would be to issue equity – equity from an entity that one short month later would need another bailout and possibly nationalization (hint: equity value = zero)?


One couldn’t make this up!

But if it was only a question of implicating Draghi, we are confident that the BMPS scandal would promptly go away after the Frankfurt-based central bank slipped a few billion €s under the table to the current head of the BOI – Ignazio Visco – delaying the eruption of the problem for another year. However, what is unique this time is that the BMPS fallout has far broader political implications due to BMPS’ historical links to the centre-left, and the fact that Bersani’s Democratic Party runs the local government in Siena where Monte Paschi is based, and controls the banking foundation that is the lender’s biggest shareholder.

As a reminder Bersani is the frontrunner to replace Mario Monti as Italian PM. Which means the immediate involvement of the entire media empire apparatus of who else but…

Yup – Silvio, who is also running in next month’s election, is now on the case, and where Silvio goes, the public is sure to follow.

As Bloomberg reports:

Berlusconi and his allies have slammed Monti over the bailout by linking the aid to an unpopular real estate levy on first homes, known as the IMU, which raised from Italian taxpayers an amount similar to the emergency loans designated for Monte Paschi.

We paid the IMU to Monti so that he could save the bank” of the Democratic Party, read yesterday’s front-page headline in newspaper Il Giornale, owned by Berlusconi’s brother Paolo. “What has been said about interventions and comparisons between the amount used for aid and the revenue from taxes is a complete fantasy,” Monti said.

Monti said today in an Italian radio interview that the election campaign shouldn’t affect the bailout timing because it’s being carried out under European rules. Still, he acknowledged that the Monte Paschi case “has a lot to do with the ugly beast of mixing banks and politics.”

The irony of course, is that the first bailout that Monte Paschi received was when Berlusconi was still PM:

Monte Paschi, the world’s oldest bank, received a first bailout from Berlusconi’s government in 2009, and has now added 500 million euros to its aid request to cover potential losses linked to the structured-finance deals, bringing the total cost of the rescue to 3.9 billion euros

However, to distract from his involvement, Silvio will be more than happy to throw none other than Draghi under the bus for having been the BOI’s head at the time, and after all – it was Draghi’s decision to bail out BMPS, not the Prime Minister’s.

Ah, the plot thickens:

“We want to know the truth, we’re tired of being taken advantage of,” said shareholder Gianni Acciughi, 60, who took early retirement from Monte Paschi in 2009. “How is possible that nobody knew anything about this? If that’s the case, then legal action has to be taken immediately against those responsible.”

Members of the Northern League party, a partner in Berlusconi’s previous government, demonstrated at today’s investor meeting. They distributed leaflets criticizing Mussari’s management and his ties to the Democratic Party.

And for those who still believe this is a non-issue, Beppe Grillo, the leader of the 5 Star Movement running in the campaign, and a very popular grass roots candidate among voters disenchanted by both parties, “said the bank’s case will turn into a scandal worse than the collapse of food company Parmalat SpA in 2003.

Needless to say the scramble by everyone to cover their backsides ahead of what is sure to be an epic media, publicity and political scandal has started:

[Bank of Italy head] Visco attended the World Economic Forum in Davos on Friday where he gave a spate of interviews to try to deflect accusations that the BOI had not done its job properly.

“It is wrong to insinuate that there was a lack of supervision by the Bank of Italy,” he told CNBC television, adding that his institution had nothing to hide and would cooperate with prosecutors probing the Tuscan lender.

Visco told reporters on Friday that “there is no question that the bank is stable.”

Actually, there is:

Outgoing Prime Minister Mario Monti said late on Friday he considered it a “remote hypothesis” that the bank would end up needing to be nationalized.

So… there is “a question“?

It only gets better:

In Davos, Visco sidestepped questions about whether Draghi knew about the derivatives trades, which were conducted between 2006 and 2009 and involved Japanese bank Nomura and Deutsche Bank.

Internal auditors at Monte Paschi already detected anomalies at the bank’s finance department responsible for derivative operations three years ago, daily Il Sole 24 Ore reported on Saturday, quoting parts of the audit dated November 26, 2009.

However, the outcome of the audit was “partially favorable” for the Siena-based bank, contrasting with “partially unfavorable” rating given by Bank of Italy inspectors led by Vincenzo Cantarella at the end of an inspection from May-August 2010.

Press reports on Saturday suggest the scandal around Monte Paschi is widening.

Yes it is. And it is “widening” at a time when former Bundesbank head Weber said in Davos that everyone in Europe has succeeded in sticking their heads in the sand:

Central banks can buy time, but they cannot fix issues long-term,” former Bundesbank President Axel Weber, now chairman of UBS AG, said in the Swiss ski resort yesterday. “There’s a perception that they are the only game in town.”

This coming from the former head of the one European central bank which several days ago requested that all of its Paris gold, and much of its New York-based gold, be repatriated.

And when the next leg of the financial crisis flares up, which it will as nothing at all has been fixed, unless one considers stuffing all outstanding issues under the rug “fixing”, nobody will have been able to foresee any of it. As always.

And it will be, naturally, “someone else’s fault.”

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With the Italian economy in its fourth recession in the last ten years and unemployment soaring, a supermarket has come up with a novel way of hiring. According to Germany’s Mittelstands Nachrichten, customers who spend over EUR30 will receive a lottery ticket and the grand prize winners will be given “temporary part-time assistant jobs” at the supermarket. We are not really sure where to go with this – but somewhere in this odd arrangement is a sad reflection of the European society’s deterioration…

Via Deutsche-Mittelstands-Nachrichten,

For the unemployed in Italy, new possibilities, to get a job. A supermarket chain is giving away jobs to their customers. The premise: you have to buy for more than 30 euros, then you get a lottery ticket, which entitled to participate in the Sweepstakes. Winners of the lottery, a temporary job part time job as an assistant waiting in the supermarket.

“Our contest is open to people of all ages and backgrounds,” said Alessandra Aloisi, HR Manager of Gruppo BSE, Bloomberg. The chain of one-time supermarkets in Rome sells lottery tickets, which are very well received by customers. “Some participants are even question whether the profits they may possibly pass on to a friend or relative,” Aloisi Sun

The economy in Italy is in its fourth recession in the last ten years. Unemployment has risen as a result of over eleven percent, which corresponds to the highest level in 13 years. A report by the OECD, will this trend continue. Mario Monti, the government has to take while a steel plant, the 25,000 jobs came as a result of an environmental scandal in danger.

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Whether we are left with the Fiscal Cliff or a Grand Bargain, workers in the U.S. face massive cuts to programs such as Medicare, Medicaid, Social Security, unemployment insurance, Food Stamp assistance and other needed social safety nets. This is an example of “austerity” which has largely been pursued in the U.S. until now, on a statewide and local level.

The policies of austerity are not unique to the U.S. They are being enacted internationally. In Europe they have been aggressively put into play for four years. While austerity has been pursued on all continents, this article will focus on Europe and the U.S.

What are the policies of austerity?

They involve the cutting of public investment and services such as education, health care, and retirement insurance. In addition they also include the privatizing of existing government assets. Public employees suffer wage freezes or cuts and mass layoffs as part of austerity measures. Labor laws are revised to empower employers at the expense of employees’ job security, wages, benefits, and voice on the job. And austerity also involves increased taxes and fees on working class people.

Austerity is sold as the only available means of reducing the debt. However, there is plenty of money to take care of these financial imbalances. It is in the pockets of the wealthy and big business elites whose think tanks and politicians are, not coincidentally, the architects of austerity. They want nations’ economies to be run more like the corporations and banks, prioritizing that their shareholders get paid first and foremost at the expense of everyone else.

In Europe the level of debt is 87 percent of its collective GDP, necessitating a severe approach, according to their outlook. However, in the U.S., which is in the beginning stages of an austerity campaign, the level of debt is over 100 percent of our GDP. Considering this level of debt and the size of the U.S. economy, the largest dose of austerity measures are yet to come, and it will be working people who will be expected to swallow them.

Austerity and Recession

What are the results of austerity? They depress the economy in the countries in which they are enacted and reduce the government’s revenue while fattening the big business elites’ financial reserves. With the January 1st Fiscal Cliff deadline in the U.S., the Economist Intelligence Unit cut its expectations for growth. According to the International Monetary Fund (IMF), Spain’s economy will contract by 1.5 percent, Italy’s by 2.3 percent, Portugal’s by 3 percent, Greece’s by 5.2 percent, Britain’s by 0.6 percent, Germany’s by 0.9 percent, and France’s by 0.1 percent.

These contractions are in addition to the devastating impact the Great Recession has had on workers internationally with high unemployment rates and a declining standard of living. Today life in Greece has been likened to living under occupation during World War II. Spain and Italy are not far behind. Given this, clearly what benefits the financial powers behind austerity comes at a great cost to the vast majority of people and the health of the economy as a whole.

The truth is that the world economy is not in crisis because of debt. It is because too many have too little to buy what has been created. Without a stronger consumer base the capitalists have no reason to invest in making more commodities and creating more jobs. How are they going to realize a profit if few can afford to buy what is produced?

Before the Great Recession the big business elites of the world had gotten around this problem by indulging in an orgy of financial speculation, especially in the U.S. This extra cash, created out of nothing, enabled them to continue handing out dicey loans while repackaging and selling these toxic assets as good investments. As long as the cash spigot was flowing today, why worry about tomorrow, was the line of reasoning for the 1%. This created massive financial bubbles in, for instance, housing in the U.S. and several European nations.

The ultimate effect of all this financial gambling was to inflate the fundamental problem with the economy, which was the crisis of overproduction. When it was no longer possible to get beyond this limit, the resulting crisis was so deep and wide that even today, four years later, there is no real end in sight. This has been greatly exacerbated by massive bailouts to the banks both in the U.S. and Europe as well as costly wars in Iraq and Afghanistan conducted by the U.S.

Shared interests?

Given the ongoing suffering of working people as a result of the Great Recession and austerity’s stunting effect on economic growth, why are the big business elites and their politicians pursuing these measures now? Aren’t we all in the same boat? Shouldn’t our fortunes rise together?

This myth is what is brought to center stage to justify the fanciful notion of “shared sacrifice” when confronting economic ills. However, it is working people who are doing all the sacrificing while the 1% fattens their shares. The relationship between the ruling economic circles and everyone else is that of predator to prey. Austerity is the result of especially acute conditions regarding this relationship today and revealing its essential antagonism to millions of people.

If governments were to take a growth approach and provide federal funds to create jobs according to social need, this would result in inflation. While it would be easier for people and governments to pay off debts, the money paid back to the investors who hold the bonds would be worth less. This is unacceptable to those who hold the purse strings, though such an approach would greatly benefit the vast majority. Austerity is a way of putting a stop to such hopes.

Big business is hoarding trillions of dollars rather than investing these funds in job creating production and services. In the U.S. alone it is estimated that these funds are up to $2 trillion. (1) Without a thriving consumer base, the big business owners have no motivation to invest in goods and services. Without this investment, there will be no thriving consumer base. The economic elite sees no way out of this Catch 22, so they are looking for other ways to enrich themselves.

One way they are doing this is by treating the world economy as an enormous casino. For instance, it has been estimated that the total amount of derivatives being played in the market comes to $1.2 quadrillion — 20 times the amount of money currently in the global economy. (2) While the results of such reckless investment produce impressive portfolios for a few today, everyone else is exposed to potentially disastrous risks in the future.

The 1% does need to obtain real money from somewhere, however. Productive investment is out of the question for the reasons discussed above. Austerity is a weapon they can use to muscle their way towards grabbing the vast pools of social capital in government programs meant to benefit working people. Rather than acting as organizers of production, the corporation and bank owners are using austerity to act as parasites, draining the economy as a whole.

Austerity also serves the business elite’s interests at the expense of everyone else in another way. Without a strong safety net, workers are left in an even more desperate competition with one another to find work. This enables those on top of the economy to depress wages, benefits, and rights since they have a larger reserve of workers to pick from who are willing to take anything.

Finally, austerity is a weapon to weaken the Labor Movement, the first line of defense for working people against corporate greed. For instance, in the U.S., it is not a coincidence that austerity measures are aimed first and foremost at public employees and teachers. These are the nation’s two most heavily unionized sectors. If their unions can be broken into accepting austerity, sweeping aside the rest of Labor in the pursuit of greed will be an easier task for the 1%. In short, austerity is a program of class war.

Push Back

Such an aggressive tearing up of social contracts that generations have taken for granted, as is required by austerity, has been provoking a fight back. In Europe this response has taken place at different rates across the continent. Greece is where the struggle is most acute with at least 18 general strikes in the last two years, and many more mass mobilizations against austerity. This example is beginning to spread.

On November 14, a series of Labor protests and political strikes swept across Europe in a coordinated protest called by the European Trade Union Confederation (ETUC). Many millions of people are estimated to have participated in these events. In Spain and Portugal there were national general strikes. Nine million Spaniards stayed at home, or 77 percent of the workforce of the country.

Even in the U.S., where the struggle has yet to advance to this potentially pre-revolutionary level, we have been experiencing an upsurge in mass collective protest as a result of austerity. The occupation in Madison, Wisconsin’s capital was in response to cuts aimed at union public workers and teachers as well as an attempt to gut their collective bargaining rights. Occupy’s proclamation of “We are the 99 percent” was an appeal for mass unity against those promoting austerity for their own enrichment. Finally, the inspiring example of the Chicago Teachers Union strike, which unified wide sectors of the city’s workers and community, was provoked by attacks on public education justified by bipartisan austerity arguments.

A Counter Proposal?

Frightened by these responses, some leading policy makers, especially in Europe, have been arguing for the need to curb austerity, combining it with growth investment to relieve the downward pressure on their nations’ rebellious countrymen for now. The business magazine “The Economist” put forward this line in the following way when countering the Financial Times pro-austerity writer Gideon Rachman:

“One puzzling mistake Mr. Rachman makes is in implying that the only fiscal alternative to austerity is stimulus; in fact, less austerity is also a decent option.”

Later the article states:

“But structural reforms are not an inseparable part of some reform cocktail that necessarily includes austerity. On the contrary, structural reform and adequate demand are two great tastes that taste great together; without some wage inflation in Germany, efforts to boost Spanish mobility won’t succeed in generating sufficient migration.”

Aside from the jeers that would greet the suggestion that Eurozone fiscal policy should encourage Spaniards to migrate to Germany to find good jobs, there are other problems with the method of this argument. A little stimulus for some European countries, a little austerity for others, is not a recipe for the golden mean. It is more like trying to mix water and oil.

Less austerity” is not a decent option for workers still suffering from the effects of the international economic crisis.

Considering the depth of this crisis and that there is no end in sight that relies on capitalist investment, either fiscal policy will benefit the 1% or workers, not both. Ultimately the outcome will be determined by a showdown between these social forces that will require a fundamental transformation of the political/economic system if workers are to prevail.

Moving Forward

The first step for workers is the building of an independent social movement that can advance its political understanding and organizational strength through mass collective struggle. To do this it is necessary to mobilize on the basis of what workers are willing to take united action on now in the fight against austerity cuts.

Each nation’s working class will proceed at their own pace in this process according to their own national situation influenced by international developments. It is inevitable that some national social movements will be able take mass action around more revolutionary demands sooner than others. A slogan that may work in one country might not connect in another. The criteria for a slogan should be if it can unite workers into taking collective action now and how this struggle increases their strength, political understanding, and ability to take on more advanced demands.

For instance, in the U.S. President Obama won the election, in part, because of his promise to increase taxes on the rich. However, it has become clear that he is more resolute in pursuing austerity policies, proposing a Grand Bargain to slash the deficit $4 trillion over 10 years with a 3 to 1 mix of spending cuts and revenue increases. (3) Consequently, in order to combat austerity, it is necessary that workers mobilize not only for taxing the rich, but also to demand that the tax rate is raised high enough to prevent cuts, create good jobs for all, and rebuild the public sector.

Likewise, the call for a general strike against austerity policies in Eurozone nations is becoming more familiar and possible in a growing number of countries. The Greek unions have used this weapon numerous times. Still, austerity presses on, necessitating, in the minds of Greek workers, the need to build from the unions higher forms of organization that encompass the vast majority of working people so as to advance their struggle for a government that truly represents the majority of working people, not the rich. As a result, the Greek left party, Syriza is rapidly growing, having won 52 percent of the vote of people between 18 and 24 years of age in the last elections.

In the U.S., calling for general strikes to oppose the Fiscal Cliff or Grand Bargain cuts has no connection to the actual level of consciousness of most working people at this time. Even the rank and file in the unions are insufficiently organized to push this demand from the bottom up now. In addition, the call for a Labor Party, while an absolutely necessary development, is still a good distance away from what will connect with and compel millions of people into united action today.

At this point, however, it is possible to agitate for Labor taking the lead in building mass mobilizations against the looming cuts to Medicare, Medicaid, Social Security, public education and other needed social programs. From this organizing and its resulting political lessons, it will be possible to advance a discussion on how U.S. workers can better combat austerity.

While austerity presents a great threat, the struggle against it holds the promise of establishing a world founded on majority rule, where equality and solidarity on an international basis can flourish.

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