Banco de Poggibonsi e di Colle Pottine,
Poggibonsi, Italia, Italy, Europe
What a guy needs in this trade is a true lollapalooza of a deal that comes in with a wet sail just in time to bring his year end figures out ahead of budget, so when our partner in the Poggibonsi Bank calls up to tell me he has such a deal for us, I am on the plane to Pisa quicker than Greenspan can say over-exuberant bubble.
For me it is always a great moment when I see that tower defying gravity, it is to physics what the bumblebee is to aerodynamics or Italy’s finances are to economics, maybe I use a cover picture of it on this report we do for Harvey Q Schicklgruber III.V on the future European currency, the euro emu.
Well, I pour myself onto this put-put train which finally gets me to historic Poggibonsi, where our partner greets me with a king size hello, Herbie, he cries, is long time, where you been, we drink to your return in our own local vino di tavola superiore, the one we make out of grapes on account this is cheaper than making it out of old rubber tyres.
So we settle for a jug or so of Brunello, which comes on very nicely, at that, and then we catch up with events, he tells me business is hard, on account his competitors are mostly out of prison now, to make room for more politicians, but also the new politicians put the squeeze on, it is all to do with this euro, so he says, Italy must be there when it starts, do you notice already we rejoin the ERM?
In fact I do not notice this, as I recall the ERM goes bust some time ago, we clean up on this in a big way, and if anybody wants to try to make it work again they sure are welcome, but before I can say this the guy is explaining how it is as if the Italian economy takes the cure, first we make good resolutions, he says, and then we have our figures massaged.
This is what comes of having a prime minister who in his day job is a professor of economics at Bologna, he comes up with this project for a special tax, which massages just enough to make the difference, but as soon as it works he pays it back with interest and calls this a reward for good behavior.
But the masseurs at the ministry like to keep one or two secrets, and one or two guys like to keep secrets from them, this is Italy, after all, so communications get fouled up, which is what gives us our chance of a lifetime, I promise you, Herbie, money is now being given away at the post office.
Mom, at this I figure my hearing misfires or the Brunello gets thru, but next morning this guy is singing the same tune, it seems some state bank issues savings bonds called Good and Fruity, or some such name, and these are on sale to the public to bring in some off balance sheet financing to help save the leaning fiscal tower from falling over.
But when the masseurs get to work on Italian T-bonds and pummel the yields down they forget about the Tutti Frutti, and the guys who issue them never hear of the masseurs, they are just pleased to find their bonds so popular and sell so many of them, which is not surprising, as they represent a sure arbitrage position, they yield zillions of basis points more than T-bonds and the rates are fixed by law.
My partner’s plan is quite simple, he wants us to pool our resources, and then go to every post office in Tuscany, clean them out of Tutti Frutti, sell T-bonds short till we cover our position, this year Santa comes early to Poggibonsi.
Well, I learn in banking college that if a deal looks too good to be true then it is, and if anybody teaches Andrew Turkey this he never ships all of Barings capital to Singapore, but in the end I agree to test the water, the two of us stop at the first post office we find and try our luck.
One catch I figure out at once, if the lines at the post office here are as slow as the lines at the banks a guy can die of inanition waiting for his turn, I remember in Florence some banker complaining how King Edward III of England defaults, I tell him the king maybe tries to bring the money back but gets tired of standing in line and spends it on a cappuccino.
Sure enough, we hit this downtown Poggibonsi post office and the line outside it stretches right around the block, but I get this feeling that I see familiar faces in it, can it be, yes, there is Rudi from UBS and that nice Mr T from Nomura and Chris Whosis from CSFP and a full supporting cast from our market, even including a guy I figure is from Cazenove on account his shoes have laces.
I have to read this as good news and bad news, the good news is we must be on to something, the bad news is everyone else is on to it too, and ahead of us in line, at that, I figure we try one more office, right out in the sticks, just for luck, but when we get there we find a large Mercedes parked in front of it, and a furious guy from Deutsche being shooed away, Scusi, signor, sold out.
At this it is fine to take an executive decision, Look at it this way, I say, by the time we get to the top of the line I figure that the deal backfires, so howzabout we have the finance ministry tipped off to what is going on, does that earn us a bankable favor, enough to put us on the inside track for when they sell the franchise for the Poggibonsi railroad?
Herbie, says our partner, already you learn to think in Italian, just give me half an hour to pass the word, but me, I figure any market where guys stand in line to buy Italian savings bonds is the kinda market Greenspan reckons is about to bubble over, much love from
Your Machiavellian son
Herbie’s Italian thoughts are translated by Christopher Fildes
