Good Job, Mario---How The ECB Set-Up The Italian Bond Market For Disaster

Yes, this means that according to the market, Italian corporate bonds are safer than the underlying sovereign, in this case Italy, itself, which is virtually impossible in reality, but is all too real thanks to the perverse action of the ECB which continues to buy Italian corporate bonds in the open market week after week, skewing the market beyond comprehension.

Meanwhile, Oughourlian and other shorters say the new government’s spending plans could push the country’s deficit up by €150 billion ($128 billion) while Rome could try to renegotiate its relationship with Europe; there is also the growing threat of a parallel currency which could effectively lead to a "fork" in the euro and the collapse of the common currency, something which Europe thought it had managed to prevent with the 3rd bailout of Greece in 2015. “What’s most troubling is that markets haven’t yet woken up to this major political risk,” Oughourlian said. And now that the period of denial is over, everyone else is starting to rush in:

 

 

 

https://www.zerohedge.com/news/2018-05-28/we-are-due-very-rude-wake-call-these-are-biggest-short-sellers-italian-bonds

 

David Stockman's Contra Corner is the only place where mainstream delusions and cant about the Warfare State, the Bailout State, Bubble Finance and Beltway Banditry are ripped, refuted and rebuked. Subscribe now to receive David Stockman’s latest posts by email each day as well as his model portfolio, Lee Adler’s Daily Data Dive and David’s personally curated insights and analysis from leading contrarian thinkers.