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Italy Said to Pay Morgan Stanley $3.4 Billion. When Morgan Stanley (MS) said in January it had cut its “net exposure” to Italy by $3.4 billion, it didn’t tell investors that the nation paid that entire amount to the bank to exit a bet on interest rates.

Italy Said to Pay Morgan Stanley $3.4 Billion

Italy, the second-most indebted nation in the European Union, paid the money to unwind derivative contracts from the 1990s that had backfired, said a person with direct knowledge of the Treasury’s payment. It was cheaper for Italy to cancel the transactions rather than to renew, said the person, who declined to be identified because the terms were private.

The cost, equal to half the amount to be raised by Italy’s sales tax increase this year, underscores the risk of derivatives countries use to reduce borrowing costs and guard against swings in interest rates and currencies can sour and generate losses for taxpayers. ‘Need to Know’ Morgan Stanley said in a Jan. 19 filing with the U.S. Mary Claire Delaney, a spokeswoman for the New York-based firm, declined to comment further. Mafia now Italy's No.1 bank as crisis bites: report. Italy’s very own special liquidity programme? [Updated] @ Some bloke & UK trader Apparently the decree refers to a "convention" between the Treasury and the Central Bank dated March 22, 2011 and to a decree dated July 29th, 2011 on that convention.

Italy’s very own special liquidity programme? [Updated]

I couldnt find the convention, but in the preamble of the July 29th decree, there is written the following: "GIVEN THE CURRENT MARKET ENVIRONMENT, which imposes a liquidity management 'based on criteria of prudence, and the consequent need to carefully assess the levels of risk and the costs' of the Ministry of operations in the money market... " For me the timing and the intention are very clear. The Italian repo market is broken because of the fall in the quality of Italian collateral since the July summit and the fact that banks prefer parking it at the ECB. The Italian Government wishes to fix its money market rather than let the ECB do it, which Italy has agreed to by treaty. This is independent monetary policy. 27/11/2011: Even with IMF's €600bn - Italy is too big to bail. There are some interesting reports in the media over the weekend, speculating that the IMF is preparing a super package for Italy, rumored to reach €600 billion.

27/11/2011: Even with IMF's €600bn - Italy is too big to bail

Here's a link from zerohedge that outlines the details of these rumors (here). There are several reasons to be skeptical as the feasibility of such a package and the potential effectiveness of it. Here are these reasons. Firstly, the IMF is a rules-based organization that normally can lend only 4-5 times (400-500%) of the country quota. French exposure in pictures. Italy hails businessman a hero after he launches appeal to save the economy. Silvio Berlusconi, the Italian prime minister, is struggling to tackle the country's debt, but businessman Giuliano Melani has suggested that ordinary Italians could pay for it out of their own pockets.

Italy hails businessman a hero after he launches appeal to save the economy

Photograph: David Gadd/Allstar/Sportsphoto Ltd A businessman has become an unlikely national hero after urging Italians to buy up government bonds to help drag the country back from the brink of an economic meltdown. As the prime minister, Silvio Berlusconi, scrambles to deliver key reforms, the Tuscan financial services entrepreneur Giuliano Melani announced his appeal with a full-page ad in the leading daily Corriere della Sera, complete with his telephone number and email address.

Melani says the bill for Italian government bonds expiring annually is €260-270bn (£223-232bn), a sum which would be taken care of if every Italian paid €4,500. But details remain scarce. Berlusconi pourrait quitter le gouvernement en 2012. Après les gouvernements portugais et irlandais emportés par la crise de leur dette souveraine, le Président du Conseil italien Silvio Berlusconi va-t-il rendre lui aussi son tablier ?

Berlusconi pourrait quitter le gouvernement en 2012

Living 'La Vita Bella': Italians Leave Fears of Debt Crisis to Others - SPIEGEL ONLINE - News - International. After so many centuries, the secret door sticks a bit.

Living 'La Vita Bella': Italians Leave Fears of Debt Crisis to Others - SPIEGEL ONLINE - News - International

But it still exists, hidden behind an image of Italy in the "Hall of Maps" of Florence's Palazzo Vecchio. "Eccolo," says Francesca, the custodian. Italy 'has been in decline since the 1980s' On a bright Sunday morning terrace on the Piazza San Domenico – smartly turned-out Neapolitan families strolling animatedly past on their way home from mass, a clown entertaining the children on the Via Benedetto Croce – Gia Caglioti isn't mincing her words.

Italy 'has been in decline since the 1980s'

"To be frank," she said, "we've been a country in decline since the 1980s – had we but seen it. Actually, there are plenty of people, including in government, who still won't see it. Italie : le plan draconien d'austérité est voté. Le gouvernement de Silvio Berlusconi a obtenu ce mercredi la confiance à la Chambre des députés pour son plan d'austérité.

Italie : le plan draconien d'austérité est voté

Quelques heures plus tard, le parlement italien a voté l'approbation finale de ce plan destiné à sortir le pays de la crise. 316 députés ont voté la confiance tandis que 302 ont voté contre. Madrid et Rome, deux façons d’être en crise. Italy Announces Austerity Plan 2.0 As Local Protests Spread, Turn Violent. After Berlusconi was scolded by everyone, but most importantly by backstop solvency provider ECB, for his bull in a China shop maneuver of the first, now defunct, Italian Austerity plan, here are the details from the next, soon to be gutted "Austerity", which readers may be forgiven, if they take it with just a grain of salt.

Italy Announces Austerity Plan 2.0 As Local Protests Spread, Turn Violent

According to Bloomberg, the details are as follows: Plan to to include higher retirement age for women from 2014To add 3% tax on income over 500k eurosItaly to approve constitutional law for budget balance SeptTo increase VAT from 20% to 21%. Will anyone take this latest attempt to appease the ECB seriously? Eurozone crisis: Italy's debt pile comes under scrutiny. 4 August 2011Last updated at 10:30 Silvio Berlusconi was forced to defend his economic strategy before parliament on Wednesday Just a few months ago, international investors were fairly relaxed when they considered Italy's debt mountain - the second highest in the eurozone.

Eurozone crisis: Italy's debt pile comes under scrutiny

Now, Prime Minister Berlusconi has been forced to defend his economic strategy before parliament, and the more excitable City economists are sending me emails declaring that "Italy is bound to default". La bataille d’Italie sera cruciale. La péninsule n'est pas la pire économie de l'UE, mais sa dette publique et sa faible croissance en font une cible pour la spéculation. Et maintenant que ce nouveau front est ouvert, c'est ici que pourrait se jouer l'avenir de la monnaie unique.

La bataille de l’euro a commencé pour de bon. Edward Altman, analyste chez Classis Capital, l’avait prévu il y un mois déjà : "La bataille finale pour la survie de l’euro sera menée, non pas en Espagne, mais sur les plages pittoresques et entre les cathédrales d’Italie". Beaucoup pensent qu’au final, une faillite de la Grèce peut être absorbée. Dette: Une crise avant tout politique en Italie. Italy's 'nepotism' fuels supply of young, middle class and educated émigrés.

Pierenrico Martino is scarcely your typical economic migrant. He comes from one of the richest towns in Italy: Treviso, near Venice, home of the Benetton fashion empire. His family is well off, he says. His father is an accountant; his mother a teacher. Martino, 30, is himself a graduate of the university of Trieste. After college, he did some travelling. Moody’s warns on Italian banks.

L'imposture de la dette publique italienne. Italy: Silvio Berlusconi pressed to make tax cuts by rightwing partner. Is Italy Not Spain The Real Elephant In The Euro Room? Looking through the latest round of EU GDP data, one thing is becoming increasingly obvious: when it comes to future monetary policy decisions at the ECB, and to exactly how many more interest rate hikes we are going to see, then the performance of the Italian economy is going to be critical.

The growth pattern now is clear enough: Germany and France move forward at a lively pace, while the so called “peripheral” economies (Portugal, Ireland, Greece, and Spain) either remain in or continually flirt with recession. They are constrained bythe combined burden of their lack of international competitiveness, their over-indebtedness and the contractionary impact of their austerity programmes. In this sense, given its size, Italy is in a key position to tip the balance between core and periphery one way or the other. #ItalianRevolution: l'indignation gagne la jeunesse italienne. Est-on en train d’assister à un Printemps européen après le Printemps arabe ? Les protestations venues d’Espagne sont arrivées en Italie via les réseaux sociaux. Sous la bannière d'#ItalianRevolution les jeunes italiens indignés se sont donnés rendez-vous aujourd’hui à 20 heures sur les principales places du pays.

Les difficultés des banques italiennes vont peser sur le FSTE MIB. Flash Eco : Moody's baisse la dette de Florence. L'agence de notation financière Moody's a abaissé vendredi d'un cran la note de la dette de la municipalité de Florence (centre de l'Italie) après que la ville eut cessé de rembourser les banques UBS, Bank of America et Dexia dans le cadre d'un contentieux sur des produits dérivés. Francesco Soldi, vice-président de Moody's et analyste en chef pour Florence, a qualifié de "sans précédent pour une collectivité locale" la décision de la ville d'utiliser une clause (auto-tutelle) de la législation italienne, qui autorise les administrations publiques à annuler des contrats sans passer par un tribunal. UBS, la première banque suisse, le français Dexia et Bank of America ont de leur côté entamé des poursuites contre la ville de Florence pour rupture de contrats, devant un tribunal à Londres. "Nous avons l'argent pour payer mais nous ne voulons pas le leur donner (aux banques, ndlr) parce que nous avons découvert des anomalies.

Florence and the derivatives machine [updated] Une crise de la dette italienne se profile-t-elle à l’horizon? - Démystifier la finance - Blog Italy sucked into the crisis one way or another « Euro Area Debt Crisis by Economist Meg. Italy has quickly been drawn into the euro crisis over the past few days as prime minister Silvio Berlusconi and minister of finance Giulio Tremonti have openly fought over the austerity package put before parliament. Ten year Italian government bond spreads over the comparable German bunds hit a record high of 236 basis points last Friday and the FTSE MIB index fell sharply. The eurogroup has decided to hold an emergency meeting this morning to discuss, among other things, recent developments in Italy. Un nouveau domino va tomber en Europe.