Mario Draghi and Goldman Sachs, Again

The endless Italian bailout story that keeps on giving, has just given some more. It turns out Italy's insolvent Banca dei Monte Paschi, which has been in the headlines for the past month due to its role as political leverage against the frontrunning Bersani bloc, and which has been bailed out openly so many times in the past 4 years we have lost track, and whose cesspool of a balance sheet disclose one after another previously secret derivative deal on an almost daily basis, can now add a previously unannounced bailout by the Bank of Italy to its list of recent historical escapades.

While little has been said in the mainstream western press about the ongoing fiasco surrounding Siena's Banca Monte dei Pasci, Italy's third largest bank and the world's oldest which may get its third bailout in three years, for fears that it may break the thin veneer of "recovery" in the European financial system, the situation on the ground in Italy is getting more serious by the minute and could have implications on both next month's general election, reaching as high up as the ECB's head Mario Draghi.

FRANKFURT — The banker now in charge of rescuing the euro wants his top staff to take Sundays off. Mario Draghi, president of the European Central Bank, eschews long meetings and refrains from lecturing his colleagues, senior ECB officials say. Until Draghi took over a year ago, insiders say, the bank had a workaholic, micro-managed regime. But even as the Italian has proved ready to intervene in the markets and try policies that would have been unthinkable a few years ago, he has brought a freer, more hands-off culture to the bank.

By James Kwak The Corriere della Sera, probably Italy’s most respected newspaper, relays a statement by the Banca d’Italia (Italy’s central bank) that its head, Mario Draghi, had “no role” in the Greece-Goldman Sachs interest rate swaps that have been reported by Der Spiegel and The New York Times. Here are some translated excerpts from the story:

Felix Salmon points us to this new Der Spiegel article:

MOST adolescent boys grow out of playing chicken when they realise the winner of the game is not the bravest, but the one too stupid to be aware of the consequences of continuing to play.

 By Simon Johnson Otmar Issing, a former senior European Central Bank official, came out strongly today against any kind of rescue package for Greece (FT op ed; Bloomberg report). He hits hard to the core of the issue: