THREAD: the article is a fair depiction but needs a local like me to fill the blanks. on.wsj.com/36jgtIP (/)
@nglinsman @amlivemon @DukeMarcude @eshow1969 @chigrl
There is a reference to #NIRP, which is killing the #EU private sector, but I already wrote extensively on that. What caught my eye was: "The oversize exposure of banks to small businesses is part of Europe’s economic fabric. (/)
"Companies with fewer than 250 employees account for 99.8% of all firms and two-thirds of all private-sector jobs in the European Union, according to the European Commission. Small businesses in the U.S. also have economic weight, but they tend to be bigger."(/)
" About half of Europe’s workforce is employed by firms with fewer than 50 people, compared with about a quarter in the U.S., according to the U.S. Census Bureau." and now, the key point:(/)
"Given their size and the small economies they serve, many European companies have a hard time attracting investors, relying heavily on bank loans for financing. "
That is partly due to banks dominating, through regulatory framework, ALSO where private savings go. (/)
The past twenty years have been bad for banks. So, governments have found it convenient to do this faustian pact: Banks would be helped get fee income (i.e., managing savers money, at no risk to themselves) in return for "playing nice" on traditional banking.(/)
That has ranged from initially turning a blind eye to doubtful selling practices, to limiting access by savers if not through fee paying vehicles. One of the cornerstone of such policy is of course a fight against competition and disintermediation(/)
So, if you want to invest in small companies as a saver aspiring to become an equity investor directly.... good luck! ti's exceedingly MORE complicated than in the US.
Then, there is the other shoe. Many policies discourage companies from growing.(/)
In Italy, in addition to the problems about starting company ( doingbusiness.org/en/rankings ), laws are set that impose more fixed costs at certain thresholds. So you either are born big, or the crossing of the Red Sea looks risky.(/)
Moreover, Schumpeter has not caught on over here: recycling is a religion on climate, NOT in the economy. In Italy, a bankruptcy could take a decade. (/)
Some, big politically connected companies, look on the upstart Zombies with a benevolent smile of an adult seeing a child take the first steps. #Alitalia.(/)
One other factor is that the continuous tendency towards more regulation and taxes means that entrepreneurs keep as little money as possible inside the company not to enhance ROI but to reduce risks. So... "it's complicated".

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More from @gbponz

21 Jan
#CBDC Thread:I participated in the online questionnaire, in the perfect knowledge that it was a complete and utter waste of time. They were going at it full speed, and no word from peasants would stop them.(/)
(ht @pietercleppe )
First, they claimed that there was "market demand". As far as I know only professionals know even what that is, divided in two camps:
1 #Fintech seeing a business offering services to intermediaries, on the bandwagon of regulatory mandates;(/)
2 Banks, worried that they may lose their deposit base.

customers dont' know and WON'T know. #CBDC won't be anonymously tranferrable, it will be as cumbersome as a credit card, and for the life of me my wife won't see the difference.(/)
Read 4 tweets
20 Jan
#ITALY Thread:
1. NOT passing meaningful reforms is the entry requirement for Italian politics;
2. The importance of the #RecoveryFund is wildly overstated, as is #EU's interest in Italian money going down the drain;(/)
3. #Renzi with this crisis loses his representation in the Government coalition, but day to day is still the one who can have it breathe or die;
4. what would be #Mattarella's counter in a dialogue with #Conte to "Had he wanted it his vote would have been no"(/)
The last is the most important because there is a measure of "prisoner's dilemma" here. Renzi doesn't want to be seen, from the LEFT no less, as the one setting parliament for a popular vote the Right would win bigly;(/)
Read 14 tweets
19 Jan
"hybrids could offer a helpful solution to accelerate the exit of government support schemes and support smaller corporates struggling to access capital markets,” (/)
(h/t @jeuasommenulle )
Yet, as the article hints at, the problem is not the guise the money goes into the companies: it's how and where the money comes FROM, or rather, who decides that(/)
We have had a decade of relentless regulatory push towards a more intermediated market, where the playing field for savers and "institutional investor" (i.e., the companies and banks acting as gatekeepers between savers and investments) has been progressively skewed.(/)
Read 8 tweets
2 Jan
Io ho vissuto la crescita del luddismo italiano dagli albori. non tutti quelli della mia età sanno chi fosse, ad esempio, Felice Ippolito. it.wikipedia.org/wiki/Felice_Ip… (/)
L'italia è un paese con scarse risorse naturali che si è sempre tenuto su con l'ingegno e l'inventiva. Ma l'inventiva è come un seme: il terreno non deve essere avvelenato. (/) doingbusiness.org/en/rankings
Read 8 tweets
2 Jan
THREAD: on.wsj.com/3hHsJHl you might not think so, but this is also part of the #QE side effects. Artificially suppressed rates defer costs way after an incoming administration bent on wayward spending has come and gone. (/) @bondstrategist @nglinsman @Halsrethink
on a practical policy level, #QE is akin to trying to solve your house bug problem by liberally spraying carpets with breadcrumbs. do YOU eat bread? sure. But that's no reason to behave like that.(/)
But the best is for later. There is a feedback loop where through higher taxes, regulation and legislation, money must be kept in political hands, be they "private" or directly public. Ladies and Gentlemen here's the deal:(/)
Read 4 tweets
1 Jan
THREAD: first we must define courage proper: dafties would call people like ANTIFA "courageous" simply because they put themselves at risk. If you define courage as the ability to be afraid and still think, I'm your man.(/) @nglinsman @amlivemon @Halsrethink
The best definition is widely quoted in an author I find myself thinking of more and more these days, Tom #Clancy: at odd points, Jack Ryan is defined as "a good man in a storm". That, of course, includes providing for the fact storms occur.(/)
MORAL courage, as in "trying to be objective", has been noticeably absent. I love strong opinions, provided that one can agree to be as fact based as it's possible and proves to have a coherent moral compass. I have an example of that: (/)
Read 11 tweets

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