Update: The Italian Job; Zimbabwe: almost at the bottom.
The Italian Job
Readers will remember the ending to that magnificent 1969 movie, The Italian Job (not the whimpy 2003 remake), when the bus carrying the stolen gold was perched precariously over the cliff.
Seemingly, the only way the thieves (led by Michael Caine) could save themselves was to lose the gold.
Well, Italian Prime Minister Renzi's banking quandry is similar.
Does Mr Renzi save his job? Or keep the EU rules.
By way of reminder, Italian banks have €360 billion of non-performing loans. Of these €200 billion (!) are loans to creditors already deemed insolvent. And of these €85 billion have yet to be written off on banks' books.
The obvious solution to Italy's massive banking woes is the EU prescription: no bailout money from the government and let the bondholders convert their bonds to equity ('bail in'). Perfecto!
Err, no. W&D reminds readers that the average Italian takes his financial advice from the cassiere di banca at the local banca. Il cassiere, of course, is going to recommend investment in bonds issued by the banca.
This is why Italian retail investors hold more bank debt securities than any other European country.
So, with a constitutional referendum coming up in October and given the choice of:
- following EU banking rules (i.e. compulsorily convert Italian bank's debt to what would be worthless equity) and face electoral annihilation; or
- ignoring EU banking rules (i.e. bailing-out out the banks with taxpayers' money) and keeping the faith of voters
...W&D is certain that the Italian government will take the via of least resistance.
Or, perhaps someone will say, "Hang on lads, I've got a great idea".* Because Prime Minister Renzi certainly needs a good one.
Zimbabwe: almost at the bottom
A couple of weeks ago, W&D reported on the impending failure of Zimbabwe as a sovereign nation.
Well, it seems that the ATMs have run out of cash. But W&D guesses that if you are the nation's Vice President, then you don't need cash.
V-P Phelekezela Mphoko (aged 76) is waiting for his $2m official residence to be completed. He checked into the Rainbow Towers Hotel presidential suite in December 2014, at a cost to the Zimbabwean people of US$1,023 per night. And hasn't checked out.
But, it's okay, folks. Apparently his new official residence is almost ready for occupation. The tell-tale signs? Neighbours report that roads leading to his home have been repaved.
But, wait, there's more. Mr Mphoko and his wife are not yet ready to move. It seems that Mrs Mphoko doesn't like the furniture in the new official residence. And won't move in until it is all replaced.
*The Italian Job: With their escape bus dangling precariously over an Alpine ravine, a gang of British robbers – led by Michael Caine's Charlie Croker – face the choice of saving themselves or risking all to retrieve the stash of gold they have stolen from Turin. However, each move they make towards the rear of the coach to reach their haul results in the vehicle inching further over the abyss.
The film ends with the famous words from Croker: "Hang on a minute, lads – I've got a great idea."