When only outlaws have credit…

I’ve stated previously that, the way I see it, the “credit crunch” in the US is more accurately described as the inevitable crash after an overabundance of credit.  Finance was irrational for years in the direction of over optimism on debts (which is why they were converted into investments), now they’re irrational the opposite direction (which is why even people with good credit can’t get a deal these days).  That’s the gist stateside, as I see it.

Now, I’m not sure what the financial situation was in Europe while we were doing that, but it’s obviously going pear-shaped right now, as it is now a global thing.  The history of some countries lends itself to some, well, interesting reactions to the funding difficulty:

When the bills started piling up and the banks wouldn’t lend, the white-haired art dealer in the elegant tweed jacket said he drove to the outskirts of Rome and knocked on the rusty steel door of a shipping container.

A beefy man named Mauro answered. He wore blue overalls with two big pockets, one stuffed with checks and the other with cash. The wad of bills he handed over, the art dealer recalled, reeked of the man’s cologne and came at 120 percent annual interest.

As banks stop lending amid the global financial crisis, the likes of Mauro are increasingly becoming the face of Italian finance. The Mafia and its loan sharks, nearly everyone agrees, smell blood in the troubled waters.

“It’s a fantastic time for the Mafia. They have the cash,” said Antonio Roccuzzo, the author of several books on organized crime. “The Mafia has enormous liquidity. It may be the only Italian ‘company’ without any cash problem.”

Of course there’s always cash, it is the Mafia after all.  That’s the thing about systemic failures, the holes don’t care what’s plugging them.

Frankly I wouldn’t be surprised if soon some of the drug cartels in our part of the world started to get into loan sharking.  As the rest of the article details, the sharks are actually using the exorbitant interest to get stakes in other business, so you could call it investing.  Funny, the non-state affiliated goons not only get their money’s worth, but have a diversified portfolio…

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About b-psycho

Left-libertarian blogger & occasional musician.
This entry was posted in economics, random shots. Bookmark the permalink.

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