{"id":6919,"date":"2016-02-29T15:37:27","date_gmt":"2016-02-29T15:37:27","guid":{"rendered":"https:\/\/blog.ilgiornale.it\/wallandstreet\/?p=6919"},"modified":"2016-02-29T15:37:27","modified_gmt":"2016-02-29T15:37:27","slug":"hang-yourself-matteo","status":"publish","type":"post","link":"https:\/\/blog.ilgiornale.it\/wallandstreet\/2016\/02\/29\/hang-yourself-matteo\/","title":{"rendered":"\u00abHang yourself, Matteo!\u00bb"},"content":{"rendered":"

\"Renzi<\/a><\/p>\n

Giulio Cesare Croce<\/strong> wrote the tale of Bertoldo<\/strong> who, sentenced by King Alboin<\/strong> to be hanged, asked – as a last wish – to choose the tree he should have\u00a0offered the neck to. The monarch, although fond of the peasant, was angry\u00a0with\u00a0his spiciness, but made him the grant. After long wanderings with his executioners, the shrewd villain chose a bush\u00a0of strawberries. Alboin, amused by the ploy, pardoned him.<\/p>\n

Even the Italian prime minister, Matteo Renzi, is sentenced to be hanged after having passively accepted the\u00a0bail-in\u00a0rules. Now he’s the target\u00a0of German arrogance that does not allow subsidies for the management of non performing loans. Let us briefly examine which\u00a0\u00abtree\u00bb Renzi is forced to choose.<\/p>\n

    \n
  1. Default<\/strong>. It’s the recipe suggested in late December from Angela Merkel<\/strong>‘s adviser, Lars Feld<\/strong><\/a>. Italian banks can’t\u00a0handle 350 billion euros of bad\u00a0loans (of which 200 billion of gross NPLs). It would be better if\u00a0the Italian State defaulted, repudiating its 2.2 trillion debt.\u00a0By this way\u00a0the Troika<\/strong> (EU Commission, ECB and IMF) would find a solution for the\u00a0banks that could\u00a0contemplate a State aid like in\u00a0Greece<\/strong>.<\/li>\n
  2. Bail in<\/strong>. This is the proposal made by the Financial Times<\/strong><\/span><\/a>. No getting around it, the Italian banks won’t make it. You can not look too closely on losses by small investors and authorize a bail in within which the State may also grant some aid to the sector. In practice, the first bank to give up would be Monte dei Paschi<\/strong>\u00a0followed by the others.<\/li>\n
  3. Homework<\/strong>. It is the solution proposed by Mario Draghi<\/strong>‘s friends.<\/a>\u00a0Matteo Renzi has done too much deficit with his last Budget law\u00a0irritating his European partners. He would better getting back and\u00a0doing his\u00a0\u00abhomework\u00bb by cutting public spending and imposing new taxes<\/strong> on high net worth individuals if\u00a0necessary. by doing so, Italy could regain trust, but probably would go back into recession. It would a high price to pay for bank subsidies.<\/li>\n
  4. The gift box<\/strong>. As the GACS<\/strong> (public guarantee on non-performing loans securitization) is useless, you can try to sweeten the pill<\/a>. Bruegel<\/strong>, the Bruxelles-based think tank, suggest to mix up good and bad loans in the securitisation vehicles that Italian banks are going to set up in order to manage\u00a0their non performing loans. The good\u00a0loans’ cash flow would help in paying both the securitisations’ coupon and\u00a0the State guarantee. This perspective is disadvantageous too. Banks should damage both their balance sheets by\u00a0selling\u00a0non performing loans at market price and\u00a0their income statements because they should cut their net interest income to pay off their debt.<\/li>\n<\/ol>\n

    Matteo, just like Bertoldo, has also got\u00a0a strawberry bush\u00a0at his disposal. It is the solution proposed by Confindustria<\/strong> (the Italian business association) : \u00abLet’s\u00a0freeze\u00a0the bail in rules and put\u00a0money on the market\u00bb.\u00a0This means Italy should break up\u00a0European Treaties\u00a0and also a mull a Eurexit<\/strong>. Would it be a gamble? Does Italy\u00a0have to commit suicide? Posterity will judge.<\/p>\n

    Wall & Street<\/strong><\/p>\n

    Translation from Italian by Gian Maria De Francesco<\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    Giulio Cesare Croce wrote the tale of Bertoldo who, sentenced by King Alboin to be hanged, asked – as a last wish – to choose the tree he should have\u00a0offered the neck to. The monarch, although fond of the peasant, was angry\u00a0with\u00a0his spiciness, but made him the grant. After long wanderings with his executioners, the shrewd villain chose a bush\u00a0of strawberries. Alboin, amused by the ploy, pardoned him. Even the Italian prime minister, Matteo Renzi, is sentenced to be hanged after having passively accepted the\u00a0bail-in\u00a0rules. Now he’s the target\u00a0of German arrogance that does not allow subsidies for the management of […]<\/p>\n  

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