Courtesy of Mish.
Once trust is lost it is very slow to recover. For now, much of Europe is acting as if it believes Cyprus is a “one time” thing? But isn’t that what we heard about Greece? Who is next? Italy?
In an article on Handelsblatt the chief economist of Commerzbank says: Italy should bring a unique wealth tax.
It is a myth to talk of crisis-strapped states. Even the German Institute for Economic Research (DIW) and the chief economist of Commerzbank, Joerg Kraemer says the numbers suggest a different view.
Kramer relies on surveys of the European Central Bank. Net financial assets of the Italians are 173 percent of gross domestic product (GDP). This is significantly more than the net financial assets of the Germans, which corresponds to 124 percent of GDP, said Kramer for Handelsblatt Online.
“So it would make sense, in Italy for a one-time property tax levy,” suggested the Bank economist. “A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product.”
Reader Bernd suggests Kraemer means a net tax on all assets not just financial ones, but either way the idea is preposterous. Banks always want bailouts to fall on the backs of private citizens not on banks.
Italy’s Companies Face Slow ‘Death’ as Credit Crunch Deepens
While pondering the above confiscation threat, Ambrose Evans-Pritchard the Telegraph reports Italy’s Companies Face Slow ‘Death’ as Credit Crunch Deepens.
Confindustria, the business federation, said 29 percent of Italian firms cannot meet “operational expenses” and are starved of liquidity. A “third phase of the credit crunch” is underway that matches the shocks in 2008-2009 and again in 2011.
In a research report the group said the economy was caught in a “vicious circle” where banks are too frightened to lend, driving more companies over the edge. A thousand are going bankrupt every day.
Franco Bernabè, the head of Telecom Italia, echoed the warnings, lamenting that firms are literally “dying from lack of liquidity”. He called on the Bank of Italy to take bolder action to head off disaster. “The Italian economy is being suffocated. The country must intervene rapidly to reinject funds into the economy”, he said.
Late payments have become a chronic problem across the board in Italy, with 47,000 official complaints last year. The research group CGIA di Mestre said half of small companies cannot pay their staff on time.
Loans To Businesses and Households Plunge
Backing up what Ambrose Evans-Pritchard said with hard data, the Italian site Il Sole 24 Ore reports New Fall in Bank Lending to Households and Businesses.
Loans to businesses and non-financial families continue to face strong decrease. In February, according to the estimates in the monthly report of ABI were down 2.84% trend (-2.79% in January). …
