Could Italy collapse the euro?

knipex

DubInTheWest wrote: »

The Irish people need to take responsibility for their own actions, that's a laugh and ridiculous to say the least. The banks gave the property developers and builders the cash and the rest of the nation has to pay hugely for it.
Europe/Irish Government wouldn't let the bondholders burn because politicians here in Ireland and all over Europe had major stakes.

Around that time all the dirty green party wanted to do was ban light bulbs lol and put up the price of petrol and diesel, may they never return. Labour came around the door promising this that and tother and went back on everything, again may they never return.

If Ireland doesn't jump high for the EU they whip our ass, just google it, lots of reading on independent.ie

The banks also lent money to people like you and me to buy houses. hundreds of billions of euros. And were cheered on when they offered 100% mortgages.

We are already hearing people complaining about mortgage restrictions put in place since and a watering down of same.

People, voters and by extension politician don't appear to learn and of course if \ hen it all goes tits up again it will be someone else fault and no houses can be repossessed.

KyussB

blanch152 wrote: »

Who would accept them?

If I was a business in Italy and I was selling computers under your system, I would have two prices, one in euros and another 50% higher if you are paying in government bonds.


Inevitably what would happen over time is that government-issued bonds would be non-convertible and euros would leave the country or be traded underground. The euro would become a FEC.

https://en.wikipedia.org/wiki/Foreign_exchange_certificate

The Chinese FECs in the mid-1980s, though nominally carrying the same value as the local yuan, traded at a significant premium in the black market, precisely because they were redeemable in foreign currency.

http://www.china-briefing.com/news/2007/11/20/15-years-in-china-foreign-exchange-certificates.html

Government will just pay the lowest bidder i.e. the people willing to accept the bonds and reduce their Euro invoice in line with that - there's no asking for 50% more...

The bonds will always be convertible as long as people have tax to pay. If a bond denominated in 1 Euro, sold for 95c, then that's a 5% tax break for anyone who can get their hands on it - this ensuring high demand, keeping the bonds in parity with the Euro.

Ronaldinho

blanch152 wrote: »

Who would accept them?

They're intended to be used to pay down the massive public sector arrears that has been racked up - so any businesses that are owed.

Why would they accept them? I would say a combination of moral suasion and the fact that a bird in the hand is better than two in the bush. They can after all be put back to the Govt. in lieu of taxes. So a little like deferred tax assets. For a business looking for credit from their bank, having some of these miniBots instead of unpaid bills on their balance sheet is a damn sight better. Perhaps banks would take them as security.

On the other hand, efforts to accelerate payments and reduce existing stocks of arrears could allow a helpful way of boosting the economy and typically would not increase deficits if all spending was properly captured when it accrued. https://www.bancaditalia.it/pubblicazioni/altri-atti-convegni/2014-public-finances-today/session2/Checherita-Westphal_Klemm_ViefersT.pdf

Whether this Govt. is deft enough to get Brussels and Frankfurt on board only time will tell. Reminds me a little of this https://www.rte.ie/news/2013/0207/366574-ibrc-ecb-promissory-note/ Maybe Noonan should consult for them

Provided there is a strict limit put on the value that can be issued, and they are used only for existing arrears I think it might be workable.

An Ciarraioch

For anyone with romantic notions about Five Star, transpires they've taken a leaf from the DUP:

https://mobile.twitter.com/leonardocarella/status/1002572115609047040

EdgeCase

An Ciarraioch wrote: »

For anyone with romantic notions about Five Star, transpires they've taken a leaf from the DUP:

https://mobile.twitter.com/leonardocarella/status/1002572115609047040

Well, with that kind of attitude, I think I will be avoiding going to Italy. Clearly unwelcome.

Stephen15

If a party like the Five Star Movement popped up in Ireland they would get my votes hands down.

blackwhite

KyussB wrote: »

It wouldn't be a condition of getting business - there would just be lower bidders who are willing to accept the bonds as payment - picking the lowest bidder is fair game.

How is a 0% bond which can only be redeemed through taxes (and can have a 100 year maturity if the government wants), an exposure?

If there's money to be made (and being a quasi-currency, there is) - then a market and proper channels for it, will develop.

You really don’t seem to understand what you are posting about.

A bond, by definition, includes a commitment by the issuer to repay the principal at some point in the future (whether by refinancing or otherwise, it still will be repaid). This has to be repaid in whatever currency it’s denominated in.

By definition, that’s an exposure the Govt has to meet at some point. If you start playing silly buggers and claiming that there’s a condition that they will only be repaid with more bonds then they will be refused by any creditors, or the EUR value will be massively discounted.

Any even still if you, by some fantasy, managed to get local acceptance of these in the domestic economy, the tax take in real EUR will now be reduced which means the ability to raise real EUR externally to bring into the domestic economy will become compromised - because nobody external will ever accept the fake currency as payment for anything.

If pie-in-the-sky nonsense on a par with the rubbish offered up in court by freeman groups.

wes

An Ciarraioch wrote: »

For anyone with romantic notions about Five Star, transpires they've taken a leaf from the DUP:

https://mobile.twitter.com/leonardocarella/status/1002572115609047040

I could see there true colours a mile off. People who are able to complain about the previous governments, but with 0 actual solutions to any problems. Them getting in with fascists isn't surprising and this latest anti-lgbt turn isn't surprising at all. The 5* movement have no beliefs and no solutions. They are far far worse than the government they replaced.

KyussB

blackwhite wrote: »

You really don’t seem to understand what you are posting about.

A bond, by definition, includes a commitment by the issuer to repay the principal at some point in the future (whether by refinancing or otherwise, it still will be repaid). This has to be repaid in whatever currency it’s denominated in.

By definition, that’s an exposure the Govt has to meet at some point. If you start playing silly buggers and claiming that there’s a condition that they will only be repaid with more bonds then they will be refused by any creditors, or the EUR value will be massively discounted.

Any even still if you, by some fantasy, managed to get local acceptance of these in the domestic economy, the tax take in real EUR will now be reduced which means the ability to raise real EUR externally to bring into the domestic economy will become compromised - because nobody external will ever accept the fake currency as payment for anything.

If pie-in-the-sky nonsense on a par with the rubbish offered up in court by freeman groups.

Why is it that so many posters trying to understand the functioning of the bond/quasi-currency, preface what they say with some variation of "but you don't understand..." - and then need to have me patiently explain to them (repeatedly), how they are missing things that I've already explained. It would be nice to lose that rhetorical posturing.

If you set a 100 year maturity on those bonds, then realistically they are going to be redeemed not through exchange into Euro's, but through use as tax payments. In 100 years, GDP growth will have whittled them down to a fraction of a percent, of GDP.

That's just one of many different ways of eliminating the debt 'exposure' of these bonds.

If they're bonds that you can shove into peoples hands, at 0% interest and a maturity date so long it's as good as not having one - then people who hold those bonds have bugger all leverage over a country - and there is zero burden to this supposed 'debt'.

What creditors? These bonds aren't exchanged for Euro by the government. They're shoved into peoples hands as partial payment - the government doesn't go asking people to buy them - that wouldn't be useful.

The purpose of the bonds is to allow greater expenditure and tax cuts - and without relying on raising Euro externally - so those aren't concerns.

There'll certainly be a limit to how much of these bonds can circulate - and it will need to be kept in balance with the states need for actual Euro's - yet that's all just a question of quantity and careful economic management, not of feasibility.

PeadarCo

KyussB wrote:

If they're bonds that you can shove into peoples hands, at 0% interest and a maturity date so long it's as good as not having one - then people who hold those bonds have bugger all leverage over a country - and there is zero burden to this supposed 'debt'.

Why would anyone buy these bonds? Buying them sounds pointless. You say they have a maturity of 100 years and provide no interest. Which means once you factor in inflation you are quite literally throwing money away. Large amounts of money if you are investing in bonds. Honestly it would be difficult to design a worse investment opportunity.

If the bond has a maturity of 100 years its value won't be realised for 100 years and therefore can only be used against a tax liability 100 years in the future. Which is useless.

If you are issuing bonds you are issuing debt. That's what a bond is. It's a form of debt.

KyussB

KyussB wrote: »

Why is it that so many posters trying to understand the functioning of the bond/quasi-currency, preface what they say with some variation of "but you don't understand..." - and then need to have me patiently explain to them (repeatedly), how they are missing things that I've already explained. It would be nice to lose that rhetorical posturing.

If you set a 100 year maturity on those bonds, then realistically they are going to be redeemed not through exchange into Euro's, but through use as tax payments. In 100 years, GDP growth will have whittled them down to a fraction of a percent, of GDP.

That's just one of many different ways of eliminating the debt 'exposure' of these bonds.

If they're bonds that you can shove into peoples hands, at 0% interest and a maturity date so long it's as good as not having one - then people who hold those bonds have bugger all leverage over a country - and there is zero burden to this supposed 'debt'.

What creditors? These bonds aren't exchanged for Euro by the government. They're shoved into peoples hands as partial payment - the government doesn't go asking people to buy them - that wouldn't be useful.

The purpose of the bonds is to allow greater expenditure and tax cuts - and without relying on raising Euro externally - so those aren't concerns.

There'll certainly be a limit to how much of these bonds can circulate - and it will need to be kept in balance with the states need for actual Euro's - yet that's all just a question of quantity and careful economic management, not of feasibility.

Are you suggesting that they could be used to pay taxes any time or held till maturity?
They are a debt - if someone presents one of these to the government instead of a euro, the government is down a euro and is back in the same situation it was before it was issued - owing someone but not having any money in the bank.
The only way to create a zero burden is if they have a zero worth.

A lack of careful economic management is what got Italy in this situation, it isn't going to suddenly pop up when someone is offering a way to clear your debts with no burden.

EdgeCase

What you're describing would be considered defaulting.

blackwhite

KyussB wrote: »

Why is it that so many posters trying to understand the functioning of the bond/quasi-currency, preface what they say with some variation of "but you don't understand..." - and then need to have me patiently explain to them (repeatedly), how they are missing things that I've already explained. It would be nice to lose that rhetorical posturing.

If you set a 100 year maturity on those bonds, then realistically they are going to be redeemed not through exchange into Euro's, but through use as tax payments. In 100 years, GDP growth will have whittled them down to a fraction of a percent, of GDP.

That's just one of many different ways of eliminating the debt 'exposure' of these bonds.

If they're bonds that you can shove into peoples hands, at 0% interest and a maturity date so long it's as good as not having one - then people who hold those bonds have bugger all leverage over a country - and there is zero burden to this supposed 'debt'.

What creditors? These bonds aren't exchanged for Euro by the government. They're shoved into peoples hands as partial payment - the government doesn't go asking people to buy them - that wouldn't be useful.

The purpose of the bonds is to allow greater expenditure and tax cuts - and without relying on raising Euro externally - so those aren't concerns.

There'll certainly be a limit to how much of these bonds can circulate - and it will need to be kept in balance with the states need for actual Euro's - yet that's all just a question of quantity and careful economic management, not of feasibility.

If they’re “shoved into peoples hands as partial payment” then they aren’t a “quasi-currency”, they’re an actual currency. All the bluster and Freeman-esque obfuscating in the world won’t help any pretend differently.

Calling them bonds when they don’t actually meet the definition of a what a bond is proves the point that, however passionately you care about shoehorning your latest version of MMT into every single economic discussion, you still don’t understand the basic economic principles that have repeatedly shown MMT-based proposals to be unworkable.

Forcing people to accept payment in a form that is essentially valueless unless your tax bill is higher than your income will just mean that nobody will want to provide any goods or services to the Italian Govt for fear of not being paid in any meaningful way. The fake currency will in all real terms be devalued massively, and be avoided for any private commerce, and where external parties are incredibly reluctant to come and trade because of the risk of not being paid in actual currency.

Unless your goal is to turn Italy into a backwater economy where all actual Euros have fled the country, and nobody external is willing to come and trade, then the proposal is utterly unworkable

blackwhite

blackwhite wrote: »

Unless your goal is to turn Italy into a backwater economy where all actual Euros have fled the country, and nobody external is willing to come and trade, then the proposal is utterly unworkable

I do think it would be a case of bad money driving good money out of circulation.
Real euros would be kept under the mattress and these IOUs would be circulating but inflating as the government printed more and more to keep up with their declining income of real Euros.
It would be an interesting experiment to observe if it was happening in Venezuela or Zimbabwe, but not so much when they are messing with the currency in my pocket.

blackwhite

Deleted User wrote: »

I do think it would be a case of bad money driving good money out of circulation.
Real euros would be kept under the mattress and these IOUs would be circulating but inflating as the government printed more and more to keep up with their declining income of real Euros.
It would be an interesting experiment to observe if it was happening in Venezuela or Zimbabwe, but not so much when they are messing with the currency in my pocket.

It is effectively what has happened in countries like Zimbabwe in the past, where the USD was used as “real” currency whilst the national currency hyper-inflated and the countries economy crumbled.

Even now, if you want to go visit mountain gorillas in east Africa, the Govts in Uganda or Rwanda won’t accept their own currencies for payment for permits, they want dollars.


But of course - pretending that this new currency is actually a bond (wink,wink) will mean that none of this that has happened repeatedly in the past will actually happen this time.

EdgeCase

Effectively your proposing borrowing in Euro and paying back in magic beans. The markets don't respond well to that and it would be considered a write down of debt / default.

At the end of the day, many of these bonds will actually be in Italian and other people's pension and savings products too. They're largely held by institutional investors.

All that would happen is Italy would be unable to sell bonds at a reasonable price and any new Lira would probably go into crisis within a few weeks and the state wouldn't have any ability to get out of that situation. The end result would be something like a Latin American economic crisis and the IMF being called in.

KyussB

PeadarCo wrote: »

Why would anyone buy these bonds? Buying them sounds pointless. You say they have a maturity of 100 years and provide no interest. Which means once you factor in inflation you are quite literally throwing money away. Large amounts of money if you are investing in bonds. Honestly it would be difficult to design a worse investment opportunity.

If the bond has a maturity of 100 years its value won't be realised for 100 years and therefore can only be used against a tax liability 100 years in the future. Which is useless.

If you are issuing bonds you are issuing debt. That's what a bond is. It's a form of debt.

Paeder, I answered that when you asked me the same question a couple of pages ago?
https://www.boards.ie/vbulletin/showpost.php?p=107159924&postcount=229

Why are you asking me the same question? Nobody buys the bonds from government, they are used as partial payment.

The government accepts the bonds themselves, as a tax payment at their face value - they don't need to be exchanged to Euro.

KyussB

PeadarCo wrote: »

So what your saying is the bonds won't be denominated in Euro which contradicts what you have previously said about the bonds being denominated in Euro.

A genuine question do you have any understanding of bonds even at a high level. I say this because your idea is completely ignorant of what bonds are, how they work and global capital markets even at a basic level.

Again, I just answered that on the previous page - the same question you already asked?

The government handing people a Euro-denominated bond as partial payment - doesn't stop the bond being denominated in Euro.

Can we lay off the rhetoric? Stating 'ignorance' when you're ignoring my past answers to the same questions you are asking again...

KyussB

Deleted User wrote: »

Are you suggesting that they could be used to pay taxes any time or held till maturity?
They are a debt - if someone presents one of these to the government instead of a euro, the government is down a euro and is back in the same situation it was before it was issued - owing someone but not having any money in the bank.
The only way to create a zero burden is if they have a zero worth.

A lack of careful economic management is what got Italy in this situation, it isn't going to suddenly pop up when someone is offering a way to clear your debts with no burden.

Yes they could be used to pay taxes at any time - there might be a limit of what percentage of your taxes you can pay with the bonds, depending on the governments need for real Euro's - but yes, the long maturity is only to make it so that they are never really exchanged into Euro by the government - the bonds themselves are usable for tax payments anytime.

The government uses the bonds as partial payment - i.e. it's UP a Euro (it got work from a person without having to pay them an actual Euro), and then when the bond is used to pay taxes, government is back to neutral.

The bonds, if tweaked so they are almost never matured directly into Euro, just used for tax payments - are effectively a zero-burden debt - while maintaining close parity with the Euro, i.e. being worth almost the same.

KyussB

EdgeCase wrote: »

What you're describing would be considered defaulting.

A default is when you cancel debt, leaving people out of pocket. If these bonds were cancelled en-masse, then that would completely defeat the purpose of them, because then they would no longer be in circulation, and no longer providing the boost in economic activity they're designed for.

These bonds are never cancelled - as a practical matter, most of them get taken out of circulation before they mature - nobody is left out of pocket.

KyussB

blackwhite wrote: »

If they’re “shoved into peoples hands as partial payment” then they aren’t a “quasi-currency”, they’re an actual currency. All the bluster and Freeman-esque obfuscating in the world won’t help any pretend differently.

Calling them bonds when they don’t actually meet the definition of a what a bond is proves the point that, however passionately you care about shoehorning your latest version of MMT into every single economic discussion, you still don’t understand the basic economic principles that have repeatedly shown MMT-based proposals to be unworkable.

Forcing people to accept payment in a form that is essentially valueless unless your tax bill is higher than your income will just mean that nobody will want to provide any goods or services to the Italian Govt for fear of not being paid in any meaningful way. The fake currency will in all real terms be devalued massively, and be avoided for any private commerce, and where external parties are incredibly reluctant to come and trade because of the risk of not being paid in actual currency.

Unless your goal is to turn Italy into a backwater economy where all actual Euros have fled the country, and nobody external is willing to come and trade, then the proposal is utterly unworkable

What, legally, makes this an actual currency vs a quasi-currency - when people are given a bonds partially in place of Euros?

Remember - quasi means "apparently but not really; seemingly" - it can ACT like a currency, without technically (in terms of legality) being one - which is the point.

I'm not 'shoehorning' anything into the thread - the Italian coalition actually openly discusses a plan very much like this:
https://www.reuters.com/article/us-italy-politics-minibots-factbox/factbox-how-italys-mini-bot-parallel-currency-would-work-idUSKCN1IQ2B1

I'm pretty happy for the discussion to end - it's not continuing because I like repeating myself to the point where it's beyond tedious for me - it's because I'm answering and correcting other posters challenges to the idea.

If the bonds ever trade below their denominated face value, lets say at 95% value - then that means anyone who snaps them up on the private market, gets a 5% tax cut - that's a pretty good deal for anyone who wants it, and would drive demand and keep them close to parity.

KyussB

Deleted User wrote: »

I do think it would be a case of bad money driving good money out of circulation.
Real euros would be kept under the mattress and these IOUs would be circulating but inflating as the government printed more and more to keep up with their declining income of real Euros.
It would be an interesting experiment to observe if it was happening in Venezuela or Zimbabwe, but not so much when they are messing with the currency in my pocket.

The bonds would explicitly NOT be issued in excess - their issuance would have to be very carefully restricted (much more so than an actual/real currency) - what you're describing there is precisely not what is advocated.

To balance the governments need for real Euro's, there would likely be an adjustable limit to how much of your tax can be paid with the bonds.

KyussB

KyussB wrote: »

The bonds would explicitly NOT be issued in excess - their issuance would have to be very carefully restricted (much more so than an actual/real currency) - what you're describing there is precisely not what is advocated.

To balance the governments need for real Euro's, there would likely be an adjustable limit to how much of your tax can be paid with the bonds.

The devil is in the detail - the last sentence is what makes the bond worth less than its face value - if there was an adjustable limit - for it to work - someone, somewhere would have to be stuck with bonds they can't use to pay taxes and that they can't redeem. They will have to be discounted if they want to sell them for cash - this risk would have to be factored in by whoever received them first.

KyussB wrote: »

If the bonds ever trade below their denominated face value, lets say at 95% value - then that means anyone who snaps them up on the private market, gets a 5% tax cut - that's a pretty good deal for anyone who wants it, and would drive demand and keep them close to parity.

Not if as above their usefulness has been limited. A bond for €100 that can't be used this year because of a limit, sold for €95, has to be sat on till it can be used - the person buying has effectively paid their taxes a year earlier than they had to - that €95 is gone and not available to them in the meantime. The alternative for them would be to keep the €95 in the bank and have it available for use or earning interest until it is needed to pay taxes.

KyussB wrote: »

A default is when you cancel debt, leaving people out of pocket. If these bonds were cancelled en-masse, then that would completely defeat the purpose of them, because then they would no longer be in circulation, and no longer providing the boost in economic activity they're designed for.

KyussB wrote: »

What creditors? These bonds aren't exchanged for Euro by the government. They're shoved into peoples hands as partial payment - the government doesn't go asking people to buy them - that wouldn't be useful.

Shoving IOUs into people's hands instead of paying Euro and saying that the debt is now settled is a default.

KyussB

Ya but see that's where the private market trading the bonds comes in - if they trade at a discount, anyone buying them at that discount, gets a nice tax break from it - making them high demand and thus minimizing the discount, so they stay close to parity.

It will also be circulating as a quasi-currency, and businesses will realize they can have greater turnover, if they accept the bonds as payment for goods - that will take time to kick off fully, but over time it will mean the bonds are useful to people even when they aren't used solely for repaying taxes - and as that kicks off more, the issuance of the bonds can increase to accommodate the increase in economic activity generated by them.

There are plenty of cash-rich companies, happy to part with a bit of that cash early, for a later tax discount with such bonds.

A default is cancelling the bonds when they are still in circulation. Nobody says the debt is settled, as soon as the bonds are handed to people - that doesn't make any sense.

KyussB

KyussB wrote: »

Ya but see that's where the private market trading the bonds comes in - if they trade at a discount, anyone buying them at that discount, gets a nice tax break from it - making them high demand and thus minimizing the discount, so they stay close to parity.

It will also be circulating as a quasi-currency, and businesses will realize they can have greater turnover, if they accept the bonds as payment for goods - that will take time to kick off fully, but over time it will mean the bonds are useful to people even when they aren't used solely for repaying taxes - and as that kicks off more, the issuance of the bonds can increase to accommodate the increase in economic activity generated by them.

There are plenty of cash-rich companies, happy to part with a bit of that cash early, for a later tax discount with such bonds.

A default is cancelling the bonds when they are still in circulation. Nobody says the debt is settled, as soon as the bonds are handed to people - that doesn't make any sense.

I have worked with treasurers in these cash rich companies you talk about. The companies haven't become cash rich by speculating on pieces of paper issued by revolutionary government policies.

The big leap in your plan is that a stable financial market will develop for these - why would anyone accept these in a transaction anymore than they would accept a postage stamp which has very similar features?

A default can be lots of things - cancelling something is the most extreme version. Not paying it back fully, not paying on time, not paying interest, not paying in the form agreed for example are all forms of default. Trying to pay a debt with a ship load of carrots is not the same as paying in cash.

My fear with this plan is that it is the ordinary person without the means to defend themselves that gets stiffed and takes the loss - a pensioner say rather than a multinational.

KyussB

Well they're not ones to turn up tax breaks, are they?

If the bonds ever trade at a discount, they are going to be of high demand due to them pretty much providing a tax break in line with the discount - people won't be merely 'accepting' them in a transaction - they will be actively seeking them out!

If a bond is issued with zero interest that doesn't make it a defaulted bond - governments have been issuing NEGATIVE interest bonds, you know... You haven't shown any form of default occurring here. You haven't established any loss here, either.

KyussB

KyussB wrote: »

Well they're not ones to turn up tax breaks, are they?

If the bonds ever trade at a discount, they are going to be of high demand due to them pretty much providing a tax break in line with the discount - people won't be merely 'accepting' them in a transaction - they will be actively seeking them out!

If a bond is issued with zero interest that doesn't make it a defaulted bond - governments have been issuing NEGATIVE interest bonds, you know... You haven't shown any form of default occurring here. You haven't established any loss here, either.

If my employer was owed €1,000,000 by the Italian state and they paid €900,000 and tax vouchers with €100,000 written on them that would be a default under the terms of the contract we agreed. No amount of arguing that the vouchers are actually useful would negate the contract.

You don't seem to have any appreciation of the time value of money or the uncertainty inherent in your proposition.

A voucher that says it is worth €100,000 that may or may not be useable in the future depending on the vagaries of the government in charge is not worth €100,000

PeadarCo

KyussB wrote:

If the bonds ever trade at a discount, they are going to be of high demand due to them pretty much providing a tax break in line with the discount - people won't be merely 'accepting' them in a transaction - they will be actively seeking them out!

You are not talking about bonds fundamentally you are talking about printing money. This is something the Italian government has no authority to do.

Nothing which you have described(the exact details of which change from post to post) could be considered a bond. Or at least a product that anyone would actually buy.

KyussB

Deleted User wrote: »

If my employer was owed €1,000,000 by the Italian state and they paid €900,000 and tax vouchers with €100,000 written on them that would be a default under the terms of the contract we agreed. No amount of arguing that the vouchers are actually useful would negate the contract.

You don't seem to have any appreciation of the time value of money or the uncertainty inherent in your proposition.

A voucher that says it is worth €100,000 that may or may not be useable in the future depending on the vagaries of the government in charge is not worth €100,000

It's not going to be used with existing contracts, they'd be new contracts... Taxes are paid routinely throughout the year - e.g. VAT 4 times per year.

The problems you present there are fairly small, with solutions that are easily figured out with a bit of thought - to the point that the potential problems didn't really need presenting.

PeadarCo

Deleted User wrote:

My fear with this plan is that it is the ordinary person without the means to defend themselves that gets stiffed and takes the loss - a pensioner say rather than a multinational.

The thing is it is exactly what happens. Look at the freeman mega thread on the legal forum. It's generally the uninformed and the vulnerable that get caught out or conned. Any large company with even a semi competent finance department would run a mile from what's being described . Which means if this idea was brought in in Italy it would be the ordinary man on the street who would be swindled out of their money.