Banks and scurrilous politics

"People and Power", Al Jazeera. Report on Beppe Grillo and the V-Days

If I walk along the street people stop me and use me as a financial consultant. They have read my posts on the economy and they treat me like a prophet. I am just a book-keeper. Basically economics is simple. The disaster was in front of our eyes, we knew it. Those in Italy who were in key positions couldn’t not know. The problem is that they kept quiet and got on with other things. On 8 July in Piazza Navona, I spoke about the economy, of the risks it was running. The newspapers and the TV channels reported the serious and unheard of offences against Napolitano whom I called Morpheus. Read the speech. Among other things, I said:
”We have one of the biggest public debts in the world: 1,647 billion euro. Each year it increases by 80 billion for the interest. Just in March we paid 23 billion in interest on the debt. In 2008, 300,000 companies will close. 300,000! And the other small companies are in the hands of the banks with debts that arrive at 780 billion euro. It’s not just the State that will go bust. The banks will ….”
I, a comic derided by the politicians and the servant journalists, was talking about economics while they were devoting themselves to:
- Fingerprinting the Roma people
- Lodo Alfano
- Abolition of wiretaps
- RAI Surveillance Committee
- Alitalia (already sold months earlier to Air France)
- Law to block trials
- Abolition of ICI tax
- Prostitutes in the streets
- Rete4.
The one who is taking us to the edge of the abyss must take a step forward and throw himself down. Veltrusconi, basically it’s worth it, it’s better to do it on your own rather than wait to be thrown.
Banks and politics are the same thing. If a banker at the head of the biggest bank, perhaps the most solid and well endowed in the country refuses to give succor to Telecom by paying it 2.8 euro when it was worth 1.5 or to enter into the farce of saving Alitalia, then he needs educating. If then the same banker is more than once in confrontation with Geronzi, the chairman of the supervisory board of Mediobanca, then Profumo must be punished. Unicredit with its share value plummeting, perhaps nationalized. “So that I can eat you better, Italia mia”. PS: The end of the line is coming. I repeat: The end of the line is coming.

Posted by Beppe Grillo at 11:54 AM in | Comments (3)
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The devil in the details!
The really sad fact is not the stock market ups and down, valuations fluctuating like yoyo’s, or that people sign up to unbelievable deal that are just what they appear to be “Not believable!”.
The sad fact is that the culprits of this mess, from bankers to CEO, to CFO and Politicians, from Regulator and Board of Directors are all laughing all the way to their Bank account.
In the US like in Italy Mr. Profumo last year was the Banker of the Year, where is he today?
In London bagging for 6 Billion at Merrill Lynch.
Credibility, Responsibility and Accountability!
When someone in Italy will embody these three virtues, maybe the light at the end of the tunnel will start blinking.
Elsewhere the future looks bright wear shades.

Posted by: Giacomo Chiametti | October 9, 2008 06:12 PM

Once upon a time when the Gold Standard was removed (in other words when banknotes were no longer covered by the same value in gold)everyone was told that the banking system survived on mere credibility from the people on Main St. towards the banking and financial system. The people (read custoers) believed in the banking system although being well aware that any rush on any bank to withdraw their money could not have been backed by the banks.
To overcome this problem banks borrowed from one another when required to do so.
What has happened now is that the banks do not trust each other anymore and do not lend to each other.
Can you believe this? One bank does not trust another bank hence the whole system of credibility has collapsed.

Posted by: Maurizio Odello | October 9, 2008 02:29 PM

The devil in the details!
I have to handed it to Mr. Grillo, on this argument he is dead right on the money.
Not only on the fact that Italy has an enormous debt, but worst that the Economy is driven and not driving the Country.
What is driving the Country are expedients and Incompetent Politicians, only capable of blaming the preceding governments while piling more debts on the already bulging one.
When Mr. B. tells Italians, rest assure no banks will fail, do you believe him?
There lays your answer, from the Mr. Conflict of Interest himself that owns one of those bank in trouble, to Mr. Draghi darling from Goldman Sachs, you would think they should know something about Tier 1 capitalization, leveraged at 50 to 1 ratio, stock options at stratospheric levels, national champions with 40-50 billion of debt.
As usual in cases like this, Institutions react a day late and a dime short, as for Italy is even worst due to the lack of money and credibility.
When the Fed says, “we will do whatever it takes!”, they are somewhat credible even though the Tax Payer is picking up the tab.
When Mr. B. says “No Italian bank will be allowed to fail!”, is he credible?
In any event this is only the beginning, Italy is a ticking time bomb, socially industrially fiscally and politically, they know it you know it, so as Sicilian do from centuries, cover your eyes, plug your noses and ears and hope for the best.
Elsewhere the future looks bright wear shades.

Posted by: Giacomo Chiametti | October 9, 2008 01:42 PM

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