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Wednesday, March 20, 2013

Meanwhile, In Italy

The hapless president attempts to form a government. Istat recently reported that the Italian economy contracted 2.8% in 2012, so you can see why Italians are fed up with technocratic government. That is exactly twice the prediction of the technocratic government. They started 2012 with a debt to GDP ratio of about 120%, and ended it at about 128%. This is not a realistic path forward.

But they probably get another square peg in round hole. Bersani's bloc holds a majority in the Italian house, but that is because Italian law specifies that the largest group gets a 54% of the house regardless if they won 26%. The Five Star Movement's announced intentions are to make any such attempt so legislatively ineffective that elections will have to be called again this year - in other words, such a candidate can be legally imposed on the country, but the Five Star Movement will block any legislative proposals, so said PM will be unable to do much. So far the Grillinis have rebuffed highly concessionary diplomatic initiatives from Bersani.

Cyprus banks won't open this week, which means that they won't open before Tuesday of next week at the earliest. Rumors of capital controls when they do reopen abound. It's so bad that the Cypriot church has offered its assets to support the state. More here with a trial subscription. The Cypriot church is a major shareholder in some of the banks. The offer is that they will mortgage their properties and buy government bonds. It is probably quite serious. However the EU troika's theory is that the Cyprus government cannot afford to take on the additional debt, so it is likely that troika would refuse.

Comments:

I'm trying to think of a historical example of a secular government in hock to the Church. The only thing I can think of is France and the Knights Templar.

That didn't work out so well for the Knights.

 
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