How Italy is going to handle the transition out of the euro

Three days ago I wrote about how Italy won't default on it's debts, and right on cue, the Italian finance minister Giovanni Tria, popped up yesterday to reiterate that Italy intends to pay down it's debts.

He also said this about the euro:

The government is determined to prevent in any way the market conditions that would lead to an exit materializing.

This is significant: they don't want to be forced out by the markets in the most destabalising manner possible.

If they go they want it to be at a time of their choosing after they have planned the whole operation carefully. Paolo Savona, the economics professor who is currently Minister of EU affairs, wrote a thesis on exiting the euro which basically said that when they did it it would be sudden and done over a weekend without the market suspecting and therefore without the hassles of capital flight. He also proposed the "mini-Bot" parallel currency to be issued at some point prior to this.

Everything the new government is doing is consistent with this.

They need the markets to be calm. They need to pay down existing euro debt (as I pointed out in my previous article, this is mainly held by Italian banks, so defaulting is not an option unless they want to trash their own banking system). And they need the mini-bot experiment to get under way in a low key manner and to see how it does before doing anything dramatic.

Lots of Europeans are reassured by the calm solid words coming out of Italy, but they should be nervous.

When I worked for a large corporation we were told that customers who complained loudly were treasures, because by complaining they were a) alerting you to a problem and b) giving you a chance to fix the problem. In other words they didn't want to destroy their relationship with you, they wanted to carry on in a better relationship that fixed the problems.

The deadly customers were those who simply walked away silently. You didn't even know they'd gone till you got the stats several months later, and you were in the dark as to why they left. because they didn't say, they just took their business elsewhere and terminated their relationship with you.

In this eurozone drama, Greece has been the complaining customer. They didn't want the relationship terminated, they badly wanted it fixed and thought that by yelling lots they'd get the EU's attention. It didn't work out because the EU is indifferent and inflexible.

Italy is different. They're playing it cool and making silent plans. When those plans are all in place, they'll be gone so quickly people's heads will spin. They're the deadly ones.