by James Corbett

corbettreport.com

June 30, 2019

Remember when Bilderberg "helped create the euro in the 1990s"?

And remember when that oxymoronic single-currency-for-many-nations-with-distinct-monetary-policies was launched in 1999?

And remember when Goldman Sachs helped Greece cook its books so it could join the eurozone in 2001?

And remember how that blew up in the EU's face a decade later with the onset of the Greek Crisis?

And remember how the Greek Crisis triggered the EUpocalypse and brought panic to Portugal, Italy, Ireland and Spain?

And remember how the EU (read: Germany and France) just started calling them all PIIGS and treating them like unruly children?

Yes, like some demented game of hot potato, the ill-conceived, ill-fated scheme to mash all the economies of Europe together under one currency has left whoever is holding the bag at any given moment facing a full-blown existential crisis. Now it seems that it's Italy's turn once again in the hot seat.

Don't worry. If you're just catching this story mid-stream, here's the skinny.

For the last year or two, the blustering blowhards of the financial world have been wringing their hands over Italy and its potential to light the next spark in the never-ending dumpster fire that is the eurozone crisis. There are a number of factors that play into this: There's Italy's crippling public debt ($1.7 trillion and counting). There's Italy's fragile banking sector (worsened by a "doom loop" of banks buying Italian government treasuries even as the government intends to open the spigots and tank their credit). There's Rome's ongoing wrestling match with Brussels over European rules limiting government deficits, with the EU constantly threatening punitive action if the Italian government doesn't tighten its belt even further.

And then there's Italy's "populist" government.

I defy you to go more than two or three sentences in any MSM story about the ongoing Italian crisis that doesn't refer to Italy's "populist" government, or its "euroskeptic" government, or its "extremist" government. Whatever one thinks of the various policies that fall under this broad "populist" brush, one thing is for certain: "Populists" are generally more reticent to respond "How high?" when the banksters tell them to jump, which is why populism is so vociferously and unanimously opposed by all mainstream pundits and commentators.

That "populism" is inherently evil is treated as such a self-evident fact that it is never even questioned, much less explained, by these pundits. Thus we have the Old Gray Presstitute warning of the "Rome government’s populist spending plans" and The Grauniad [sic] opining that "the market turmoil in Italy would show voters the dangers of supporting populists."

But what is this dreaded populist government (a coalition of Beppe Grillo's Five Star Movement and the far right Lega, headed up by Matteo Salvini) actually going to do about the debt crisis? Why, make it worse, of course!

Yes, it seems the populists are itching to flash a rigid middle digit at the EU by blatantly flaunting the eurozone's deficit rules. Their preferred path to prosperity is evidently to slash taxes and increase spending. Their plans even include a "citizen's income" payment that has been likened to the universal basic income idea that is gaining popularity among the precariat.

But here's the real question: How are these populists going to pay for all this? And here's the answer: By issuing mini-BOTs!

So what's a mini-BOT, you ask? Good question!

BOT stands for "Buoni Ordinari del Tesoro" or Ordinary Treasury Bonds, i.e. the fixed-interest debt securities that the Italian government (and all governments) issue to finance their debt. These are issued in various maturities, from six month bills all the way up to 30 year bonds.

The proposed "mini-BOTs," on the other hand, are anything but ordinary. Essentially, Salvini's Lega party is toying with the idea of issuing treasuries in small denominations (similar to the denominations of the euro itself) that could then be used by the government to pay contractors or to distribute tax refunds to the public.

Essentially, these mini-BOTs would be IOUs issued directly from the Treasury, and they would function, as many have pointed out, as a parallel currency to the euro. In fact, some have even suggested that the issuing of the mini-BOTs would be the first step toward Italy exiting the eurozone altogether and would give Rome a head start if they were forced into a sudden "Italexit." Cooler heads argue that the mini-BOT is merely an empty threat for the Italians to use as leverage in their negotiations with the EU over the debt crisis. The threat of a parallel currency operating within the eurozone—and the dangerous precedent it could set for other EU members who may be chafing under the Union's monetary restraints—is the type of thing that keeps the Brussels EUreaucrats up at night, and those darn pesky "populists" know it.

In fact, arch-bankster Mario Draghi, the head of the European Central Bank (ECB), warned of just such a possibility several years ago:

“If Italy one day left the euro and reacquired its own autonomous currency, with interest-rate freedom, and the new lira was devalued, it would be a huge problem for Germany’s exports,” Monti said. “And it would also be a major problem for Italy,” he added. Germany is by far the Eurozone’s largest economy, it is also a surplus country that sells most of its products to its fellow EU nations. Indeed, while Greeks and Spaniards were lavishly spending on the back of cheap credit, Germans were selling cars and other products to those same lavish spenders.

Whether they are intended to be taken seriously or are merely being wielded as a threat, even the idea of the mini-BOT—which appeared in the Lega's election manifesto and which was even endorsed by Italian parliament in a non-binding vote last month—has been enough to spook investors away from the eurozone.

And all of this might help shine a light on another battlefront between Rome and Brussels: the Bank of Italy's gold holdings. You see, back in March the ECB issued an odd statement claiming that eurozone member countries "must seek ECB approval to manage gold reserves." In fact, Draghi specifically delivered this message to "two Italian members of the European Parliament."

So it is no surprise that the Italian populists, reading the writing on the wall, have begun to act. Specifically, according to The Wall Street Journal, lawmakers from the Five Star Movement moved to pass two draft laws:

"One law would instruct the central bank’s owners, most of them private banks, to sell their shares to the Italian Treasury at prices from the 1930s. The other law would declare the Italian people to be the owners of the Bank of Italy’s reserve of 2451.8 metric tons of gold, worth around $102 billion at current prices. Such a move could in theory widen the scope for selling the gold and reduce the bank’s reserves, which help underpin the financial system."

This remarkable tug-of-war over the central bank of Italy and, perhaps more to the point, its gold holdings, is continuing to unfold this week as the ECB is now formally requesting the Italian government to remove a reference to the Bank of Italy holding gold as an "exclusive title of deposit." In other words: The Bank of Italy doesn't own the Bank of Italy's reserve gold. So who does? The ECB will give you one guess on that one.

So now the battle for control over the Italian economy is shifting to a battle for Italy's not inconsiderable gold holdings. And all this comes just as Italy is preparing to launch its mini-BOTs that, some argue, could be the beginning of Italexit.

You can call the eurozone dumpster fire many things, but you can't call it boring. It seems that this battle between the populists and the banksters is just beginning to heat up. And while we may not agree with all of the policies that the populists are trying to implement, the non-globalists and non-technocrats at least have to agree that the affairs of Italy are better left to the Italian people, not unelected pencil pushers in Brussels.

So, for the moment, Italy is the front line of the battle against the EU. And things are just beginning to heat up. Grab your popcorn, folks. However this turns out, it's going to be one heck of a show.