Submitted by Tyler Durden
One half of the reason why the “market” has finally been reacquainted with gravity is its realization that the previously reported Spanish kickback scandal, which incidentally has been known for over two weeks to most if not the algos that push stocks higher, is refusing to go away. As El Pais summarized below, the graft revealed in this ongoing political fiasco threatens to take down everyone in the Spanish ruling PP, from PM Rajoy, who received more than €300,000 over the years, and on to the lowest rungs of political corruption.
The other half of the reason for today’s Italian stock market collapse is the well-known to our readers scandal involving Italian bank Monte Paschi, which also refuses to go away due to its massive political implications three weeks ahead of the Italian elections. Yet the reason why little if anything has been mentioned about what may soon be a nationalization of the third largest (and just as insolvent) Italian bank in the mainstream US press is the resulting humiliation for the current ECB head, ex-Goldmanite Mario Draghi, who has been aggressively pushing to become a bank supervisor of all European banks as ECB head, yet with every day new revelations emerge about how epically he failed to supervise a major Italian bank right under his nose as head of the Bank of Italy.
The latest in this developing scnadal which not even the market can ignore any more comes once more from the Bank of Italy, which has once more changed its story. Recall that as recently as January 23 Mario Monti vowed in Davos that “nobody knew nuthin”:
- BANK OF ITALY SAYS MONTE PASCHI HID DOCUMENTS ON TRANSACTIONS
This was a sentiment that was vouched by the Bank of Italy itself, which pled complete ignorance and accused then-BMPS management of everything.
Turns out Monti and the Bank of Italy both lied.
And now that it has to change its story once more, it is instead blaming the fact that it had no authority to act over what has emerged its own inspectors discovered were derivative irregularities as early as mid-2010. As Reuters summarizes, what we first said two weeks ago: “The roots of the corruption and derivatives scandal at Monte dei Paschi all stem back to when Draghi, now president of the European Central Bank, was chief of Italy’s central bank from 2006 to 2011.”
So now that the Bank of Italy can no longer plead ignorance, what is the defense? Why inability to actually do anything.