Friday, October 19, 2012

The Italian Government’s insider trading

Today, I read on the news the Italian 10-year bonds dropped to 4.77%, the lowest record since June 2011. So those who in the past 6 months invested in Italian bonds, made a 25% capital gain. 

In my latest post about banking (Banks Stopped Banking), I have hit hard on banks because once they received massive amounts of cash from Central Banks instead of lending out money to business companies in need of cash, they invested that money in state bonds. In my opinion such a move would have got the market completely stuck. In fact mainstream media praised the banking system claiming it was a great move to gain stability. 

By reading the news today, governments is telling us the story that banks and government officials saved our system and that they did it well by investing their money in Italian bonds. The Banks raised Italy’s risk by investing in the bear market, something that eventually would have gone up. 

The very reason why banks invested in state bonds is because they already knew the spread would have gone down. Bankers are awarded bonuses. If banks make money they make it too. So they chose to secure their bonus and they gambled on the bear market.

The 2008 crisis, which is still on, was generated by those same people who now have been called to solve it.  

These are the only people who took advantage of the crisis and mostly they took an undue advantage of us all!!!! It’s like asking a robber to protect your money. The trick is really simple and it’s made of two stages. 

First I destroy your asset’s value then I buy it for a penny, then I raise it up again and then I sell it big time. 

Let’s see it together: 

In the past few months the major Western governments attacked the Italian system and the Italian bond spread went up. In the meanwhile they made up an infamous media campaign against Italy, that literally ditched our financial situation. Then they led the banks to buy Italian bonds. 

Please consider bankers get millions in bonuses and that the incumbent Italian government is plenty of technocrats. 

After a few months they emphasised a series of positive macroeconomic figures, so that the risk about Italy and by consequence the spread both went down. This evil plan was possible thanks to the connivance of the Italian government, the banks and the mainstream media. 

What then? 

Those managers who made the banks realise outrageous profits were rewarded with stellar bonuses. 

While those business companies that desperately needed the money to survive they never obtained their deserved help and many of them unfortunately went bankrupt. 

However the game is not over. The worst is yet to come: the future. 

Small businesses will face the crisis and because of their lack of liquidity they will be pressured to sell off their stash. If you add up the out-of-control Italian revenue service, the game is even clearer. 

Indeed those who gambled they found themselves with a lot of cash and they can buy goods at very lowered prices. These people generated the crisis, these people made their money out of it while we are those who are going to pay it. 

If we were in the U.S. Stock Market, this would have been Insider trading....big time! 

Unfortunately this is Italy and the business world pays the system’s inefficiency. Business in Italy is overtaxed and can’t grow its potential at its best. 

These are the real economic barriers to Italy’s industrial development and its potential economic growth. 

Luigi Foscale

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