The fable of the Wicked Wolf and the five little pigs: Greece, Ireland, Italy, Portugal and Spain continues. If Greece was the first little pig to be eaten up by the public debt and by the upset of the banks crammed full of derivatives, Ireland is the second chapter in the story. The biggest Irish bank, Anglo Irish Bank, is on the brink of collapse. It needs money, to be recapitalised. If it goes bust it will take Ireland with it and this is why the government is obliged to intervene (for the second time) by bringing 35 billion euro of aid to the banking sector with an increase in the public debt and in taxes. The Anglo Irish Bank is at risk above all in the real estate market that is plummeting all over the world. Sooner or later, all the banks, including the Italian ones, will have to devalue their real estate heritage and present it using real market values. It is a sure contamination that will put at risk the banks that have invested in cement. The real estate sector in Italy is over-valued, doped by information. Houses are worth up to a half of what is declared. The big cities are carpeted with signs saying “Vendesi" {for sale} and "Affitasi" {for rent}, but no one is selling and no one is renting. And when it happens, the price is decided by the buyer, or the tenant, not the owner. The question that the Bank of Italy should be asking itself is: "By how much should the banks be devaluing the real estate and how many of them are risking collapse?" However, the skies of the cities and of their suburbs are always crowded with cranes-without-wings, who is financing loss-making projects? Which banks, which insurance companies are putting at risk the savings of their savers? While in Parliament they are talking about “nothing” and they are qualifying for a pension after two and a half years, the Wicked Wolf is getting close to the door of the pig called Italy.

fonte: Financial Times

The ratio of the Public Debt to the GDP sees Italy in second position with 118%, with very little distance from Greece at 125%, but above Portugal and the other happy little pigs. If money attracts money, debt attracts debt. The EU will impose a penalty of 0.2% of the GDP on PIGS states and by doing that, it will increase our debt. A brilliant idea that will allow “Tremorti” to issue other State bonds to pay the additional debt. Italy is hanging by a thread, and it depends on the ability of “Tremorti” to sell new debt and to pay the ever higher interest, about 80 billion euro in 2011. The more you sell bonds, the more the interest you pay. The greater the increase in the gap between our production and that of the other European countries, the more the interest that you pay to compete with their State bonds. It’s a never-ending spiral. When the Wicked Wolf knocks down the door it will perhaps be a relief.