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Berlusconi Hints At Italy Returning to Lira

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Berlusconi has mentioned in the past of Italy possibly returning to the Lira and has is at it again as he warns of an Italian exit from the eurozone unless the European Central Bank gets more powers to ensure lower borrowing costs.

Reminding the world of just the kind of truthiness that got him sacked originally by that other Italian, the Ex-Goldmanite Mario Draghi, back in November 2011, and which the world has to look forward to when Silvio Berlusconi returns to power some time in 2013, even if not as PM (a position he currently has a snowball’s chance in hell of regaining based on current political polls), Reuters informs us that the Italian, who certainly has not read the Goldman book on status quo perpetuation, just said the unimaginable: the truth. To wit: “If Germany doesn’t accept that the ECB must be a real central bank, if interest rates don’t come down, we will be forced to leave the euro and return to our own currency in order to be competitive.” Berlusconi said in comments reported by Italian news agencies Ansa and Agi. The 76-year-old media tycoon has made similar remarks in the past about the possibility of Italy, or even Germany, leaving the euro, but has often at least partially rectified them later.” Not this time. Now with Germany and the Buba folding like a broken chair, Silvio is coming back and knows he can demand anything and everything, and Germany has no choice but to accept, Merkel reelection in a few months be damned.

Perhaps the former PM who recently got engaged to this 28 year old girl who obviously loves him for his personality has read our little primer on what happens in a Europe in which external devaluation (i.e., FX) is not a possibility, and where another 30-50% drop in PIIGS salaries would be neccesary to restore competitiveness. That, or a return to the Lira of course. And Berlusconi has seen that in the duel between Greece and Germany so far the former (and specifically its creditors) have gotten all the advantage. It is only a matter of time before he parlays that negotiating approach to Italy as well, and in the process destabilizes whatever artificial balance the ECB may have created.

….

Enjoy the little European respite ladies and gents, because in a few weeks, the Magic Money Tree-free reality is coming back with a vengeance.

Source: ZeroHedge

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Italian Cities Going Bankrupt Next

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This euro debt crisis lurches on as early reports are surfacing from Italy of many cities struggling, so much so that they are even considering closing schools. Last week it was regions in Spain that were bust followed by a spike in Spanish bonds, now the focus will shortly shift to Italy and already we are seeing an increase in bond prices. The EURUSD is currently at 1.208, at what level will it be by the end of the summer?

The ordinary Italian citizens are beginning to see the big picture and there are reports in LaStampa of panic setting in across social media sites regarding the current state of Italy’s economic situation.

ITALY’S financial outlook darkened today amid warnings that 10 cities are at risk of bankruptcy and schools may not be able to open in the autumn because of drastic spending cuts.

The cities at risk of running out of money include Naples, Palermo in Sicily and Reggio Calabria, on the toe of the Italian boot, according to the Italian press.

“The situation is becoming worse by the day,” said Graziano Del Rio, the president of a national association of municipal councils.

The warning came just days after Mario Monti, the prime minister, expressed fears that Sicily, which has a high degree of fiscal autonomy, was on the brink of a default.

Cities and towns in southern Italy have for years been plagued by mismanagement, corruption, the wasteful use of EU funds and infiltration by the Mafia. But the “black list” of cities at risk also includes some in the north of Italy such as Alessandria, in the Piedmont region.

Italy’s regions face “a serious situation”, said Annamaria Cancellieri, the interior minister, although she downplayed concerns that Sicily would be forced to default.

Since when have things got so bad that schools need to close? Obviously, this points to how serious the situation is brewing in Italy. Why couldn’t it have happened in my day? Somebody always benefits from a crisis 😉

Deep cuts to Italy’s provinces may mean that some schools will not be able to open after the summer holidays, the president of the provincial government association said. “With these cuts we won’t be able to guarantee the opening of the school year,” said Giuseppe Castiglione.

Mr Monti hopes to reduce the country’s €2 trillion national debt by dissolving 64 of Italy’s 107 provinces, addressing long-standing concerns that they are an unnecessary and wasteful tier of government.

The government plans to slash €500m from the provinces’ budgets this year and a further €1bn in 2013.

The Monti government is pushing ahead with an ambitious spending review that envisages cuts to government services worth €26bn over the next three years.

Mr Monti reiterated that he will step down in Spring 2013, paving the way for elections.

Finally, Berlusconi will make another bid to be president once Monti steps down. The way look at it is, this presidential election can be viewed as an IQ test for the nation. A vote for the corrupt Berlusconi is a vote for Dumocracy.

Silvio Berlusconi has indicated that he will try to become prime minister for a fourth time, a declaration that has only increased market nervousness over Italy’s economic future.

Source: Irish Independent, MISH

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