Berlusconi Job

And for a funny view on all this tragic Italian comedy a nice article from Zero Hedge:


Surely this means all Italian labor unions, which are at the heart of this whole fiasco, will now gladly unravel and Italian debt will be promptly rolled. All $400+ billion of it in the next 12 months. 
Just out from Bloomberg:

• BERLUSCONI TO RESIGN AFTER APPROVAL OF AUSTERITY LAWS
• ITALY'S PRESIDENT NAPOLITANO COMMENTS IN E-MAIL STATEMENT
• ITALY'S BERLUSCONI TO RESIGN AFTER APPROVAL OF AUSTERITY LAW
• ITALY'S PRESIDENT TO START CONSULTATIONS AFTER RESIGNATION

Naturally there is fine print and it is that Berlusconi would resign after the 2012 Budget is passed. As a reminder, today saw the 2010 budget passage. So, Silvio is out... in 2013?
In the meantime, this:

...At least until Silvio updates his facebook wall and says it was all a misunderstanding.

Hellhole cities on the rise in America

The tax base in many areas of United States has been absolutely devastated as millions of jobs have left the country.  Hundreds of cities are drowning in debt and are desperately trying to survive. 
Last year, city government revenues in the United States fell by another 2.3 percent.  That was the fifth year in a row with a decline. 
So what are cities doing to make ends meet?  Well, one big trend is that many U.S. cities have been getting rid of huge numbers of employees. 72 percent of all U.S. cities are laying workers off this year.  Social services and essential infrastructure programs are also being savagely cut back in many areas of the country.

Below an incredible collection of stories from the hellholes:

Street lights get repossessed because of unpaid electric bills
Police does no longer prosecute domestic violence cases in order to save money.
Municipality stops sending out pension checks to retired workers.
City rips up asphalt roads and replaces them with gravel because gravel is cheaper to maintain.
City eliminates the entire public bus system.
Nearly half of all the people in Detroit can't read.
One out of every ten homes sells for under $10,000.
You can literally buy a house for one dollar.
Hundreds of people living in the tunnels underneath the streets.

Nearly half of the public schools in the city shut down because of a lack of money.

10 most dangerous cities in the world.
Prostitution and drug dealing are two of the only viable businesses that remain.
Police chief announces that the police department will no longer respond to calls about burglary and identity theft due to very deep budget cuts.

Spanish Army delinquent on its weapon purchases

El Pais is reporting how the Spanish Army is in arrears of payments for its latest toys and is at risk of not being able to pay at all.


Just wondering how the repo men will seize the assets this time, will they recruit mercenaries or send the Marines!




Translation from Spanish below:

The overall bill called special weapons' programs includes 19 weapons systems that mostly incorporate new technologies - totals 30 billion, around 3% of Spanish GDP, of which Defence has so far paid just under 5 billion.

Companies should be paid the remaining 26 billion in instalments until 2025, but defense officials themselves acknowledge that this is impossible without a drastic increase in the budget, which is unthinkable given that Spain has set a priority to reduce the deficit 6% at the end of this year and 3% in 2013 (with 2010 data, the deficit of all government is 9.2% of GDP).

Already this year the Ministry of Defence has been in serious trouble to meet their obligations.

Defence sources said they would not have enough money even if there were no additional expenditures through 2025.

In his appearance before Congress last October to present the budget for this year, Secretary of State for Defence, Constantino Mendez , already referred in the starkest terms to the situation: "We should not have purchased weapons we are not going to use for scenarios of confrontation that do not exist and, more seriously, with money that we did not have then and do not have now." 

Italian emergency budget could trigger run on Italian banks

Today the Italian Finance Minister has informed the Parliament of the measures he is going to enact to stabilize the budget.
The proposals were foggy enough to allow for last minute fixing should the political or public rage get out of control.
Aside from all the other proposals which are grave enough and risk enacting the same downward spiral we have witnessed in Greece, the most scary and controversial one was the famigerate "patrimoniale" which is a flat tax on all bank accounts and share earnings that is collected by the Italian government directly from the accounts of every bank operating in Italy.
It was expected that due to high savings rates among the Italian population the first piggy bank to be broken if needed would have been private savings accounts.
This is now coming true and the draft is proposing to tax every income above 90.000 euro with a flat tax of 5-10 percent of the total amount of assets, details are not clear yet and in typical Italian style susceptible to change till the last minute, but it is clear that this proposal could trigger a run on Italian banks in the following weeks.
To enact this kind of law would clearly send a message of  desperation, since they would be using a tax that is guaranteed to accelerate cash bleeding of Italian banks.
Those who have savings will do their best to bring them out of the country and those who were planning to invest in Italy will cheerfully stay away.
No other European country has considered regardless of the severity of the crisis this tax for a simple reason, it ignites a cascading  run on banks and a disastrous outflow of capitals!
The last time it was enacted in Italy was before the Euro and was used once only as a special Euro Tax to raise capitals in order to satisfy requirements for entry into the Euro. Lira was then still the Italian currency and movements of capitals were monitored and restricted.
This time though it is a different story within a single common currency there are no restrictions to movements of capitals within the Eurozone and at large within the EU, thus allowing anyone unwilling to be taxed 10% of their capital to open a bank account anywhere else in the Eurozone and escape taxation.
Greece experienced the same dilemma when a simple lack of confidence in Greek banks caused massive outflows of private capitals from Greece to Cyprus and England.
Should they go forward with this plan be prepared to see capitalization of Italian banks to dry up with massive outflows to safer havens.

US Federal Shutdown explained

Image by Francisco Diez via Flickr

So It seems that in less than 24 hours the United States Federal Government will shut down unless a last minute resolution is reached, what does it mean exactly, full report on the shutdown process can be found at the US Congress Archive: http://democrats.rules.house.gov/archives/98-844.pdf





An extract on what happened the last time can be found below:

Effects on the Public


The long shutdown that began in December 1995 affected many members of the
public. A few examples, taken from congressional hearings, press and agency accounts,
follow:
! Health. New patients were not accepted into clinical research at the
National Institutes of Health (NIH) Clinical Center; the Centers for
Disease Control and Prevention ceased disease surveillance (information
about the spread of diseases, such as AIDS and flu, were unavailable);
hotline calls to NIH concerning diseases were not answered; and toxic
waste clean-up work at 609 sites stopped, resulting in 2,400 “Superfund”
workers being sent home.
! Law Enforcement/Public Safety. Delays occurred in the processing of
alcohol, tobacco, firearms, and explosives applications by the Bureau of
Alcohol, Tobacco, and Firearms; work on more than 3,500 bankruptcy
cases was suspended; cancellation of the recruitment and testing of
federal law-enforcement officials occurred, including the hiring of 400
border patrol agents; and delinquent child-support cases were suspended.
! Parks/Museums/Monuments. Closure of 368 National Park Service
sites (loss of 7 million visitors) occurred, with local communities near
national parks losing an estimated $14.2 million per day in tourism
revenues; and closure of national museums and monuments (estimated
loss of 2 million visitors) occurred.
! Visas/Passports. 20,000-30,000 applications by foreigners for visas
went unprocessed each day; 200,000 U.S. applications for passports went
unprocessed; and U.S. tourist industries and airlines sustained millions
of dollars in losses.
! American Indian/Other Native Americans. All 13,500 Department of
Interior Bureau of Indian Affairs (BIA) employees were furloughed;
general assistance payments for basic needs to 53,000 BIA benefit
recipients were delayed; and estimated 25,000 American Indians did not
receive timely payment of oil and gas royalties.
! American Veterans. Major curtailment in services, ranging from health
and welfare to finance and travel was experienced.
! Federal Contractors. Of $18 billion in Washington area contracts, $3.7
billion (over 20%) were managed by agencies affected by the funding
lapse;10 the National Institute of Standards, was unable to issue a new
standard for lights and lamps, scheduled to be effective January 1, 1996;
and employees of federal contractors were furloughed without pay.

Worth noting that there have been 17 shutdowns since 1977. The last one, in 1995-1996 (for six days in November 1995 and three weeks from December 1995 to January 1996) cost $1.4bn. 

Best of TED: Bill Gates - How state budgets are breaking US schools

Interesting discussion on the US budget mess:

Wisconsin's crisis turning surreal

I It appears uprising has finally reached United States as well.
For the second straight day, demonstrators have been pouring into the streets of Madison, Wisconsin to protest Republican Governor Scott Walker's anti-union plan to address the state's $137 million budget shortfall, prompting comparisons (and denounciations of these comparisons) to the uprising in Egypt.

Democrat lawmakers, who are firmly opposed to voting on the bill which is said to already have majority support, and who have been boycotting the vote by being absent from the state capitol, have now escalated and patriotically left the state. The reason is that while the vote can not take place without at least one Democrat being present, the police had been sent out earlier, with orders to sequester the democrats. The democrat response: run away. As the AP reports: "Senate Republicans can't vote on the bill unless at least one Democrat is present. Police could be dispatched to retrieve them, but it was unclear if they would have the authority to cross state lines."