Changes at the top

Attentive reader, you no doubt have spotted a small edit at the top of this blog in the space designated for, to use newspaper speak, the "sub-hed". A few years ago I thought the most apt description for this blog was the ancient Roman phrase "Hic sunt leones", which I had interpreted as "from here, be lions".

Over pizza and wine last night, I was informed that this is not 100 percent correct. The Italians translate it to "qui ci sono i leoni" or simply "here be lions". There is more than a subtle difference. My interpretation suggests that just beyond this point, it is not safe to tread. But from where I stand, it's probably OK. Probably. Whereas, the ancient Romans used the expression to say that this whole damn place is unsafe to tread. How unsafe? There's lions, amico. Nuff said.

A special thanks to the always attentive (some might say, "disagreeable") Luca for pointing this out.

Italy's dilemma: tax the church or find the cheats?

In a nation of tax cheats, who is Italy's biggest tax dodger? The Catholic Church, evidently. Pressured by the EU and the Prodi government, Vatican officials say they are willing to go back to the negotiating table with government bean counters to determine which of the estimated annual 1.3 billion euros in tax breaks is legit. The issue is over ICI, the local tax. The Church has long been exempt from paying ICI on the grounds, to put it simply, it is a non-profit. The only problem is the church runs a healthy commercial business in the form of health clinics, hostels and schools all over Rome, and beyond.

But a rewrite of the tax code last year, aimed at chiseling away at Italy's teetering national debt, means the Church's commercial businesses (in other words, any Church business that competes with local hotels, schools and clinics) are eligible for taxation.

Italy's public debt ratio is the second highest in the OECD, making any fresh tax revenues urgent. The problem is an obvious one: it doesn't collect enough in taxes to fund its ballooning expenses. A big problem is tax cheats. Italians dodge taxes to the tune of 100 billion euros (or 7 percent of GDP) annually, Reuters reports. It's not just famous motorcycle riders either; major corporations who hide their money in off-shore tax havens is a common accounting trick here, and everywhere. Thus, going after the church makes sense in a country that can ill afford to let anybody slide on their taxes. Ah, but if it were that easy.

In the coming days, Pope Benedict is expected to publish his latest encyclical. In it, he is expected to denounce tax cheats as robbing the well-being of society. His big target is expected to be the use of tax havens by big business to cut out the tax man.
On the eve of such an important encyclical for Italy's treasury, I would imagine the negotiations have already begun between church and state.

You won't read this in the guidebook...

The scene: brilliant blue sky. Siena's famed campanile glints in the sunshine, looming over Piazza del Campo.

Xtina (to me): You have to understand something, darling. This town is a bit fake. They restored much of it in the 1700s.

Miss Patata Rossa 2007

It's sagra season, that time of year when every paesino, frazione and localita' aims to best their neighbor with the most sumptuous menu. It has to be getting tough on these little communities, what with la sagra delle cozze (mussels) in Pedaso, polenta in the next town and lasagna elsewhere. How can a town on a tight budget compete? Take a lesson from Colfiorito, a little town (pop. poco) on the Umbria-Marche border, that has rolled out a daring publicity campaign this year for its annual patata rossa (red potatoes) festival. The town has one major asset in the publicity department, a two-lane superstrada blows right through the middle of it, perfect for catching the attention of motorists. How is Colfiorito selling the red potatoes this year? With S-E-X, evidently. It's the "XXX Sagra della patata rossa".



Xtina points out it's merely the 30th annual festival, but the queue to get in would suggest otherwise.

Today's word of the day: liquidity

As in this Markets 101 summary by Mr. Econ, Pres. George W. Bush:

Another factor one has got to look at is the amount of liquidity in the system. In other words, is there enough liquidity to enable markets to be able to correct? And I'm told there is enough liquidity in the system to enable markets to correct.

And, George, how does liquidity affect the market? George? Mr. Bush? Are you paying attention, George?

In market-speak, it's hard to imagine a more troublesome word than liquidity. It's positive. Most people know that much. But what does it actually mean? Definition 1: liquidity refers to the ease at which an asset can be converted into cash. In other words, how fast you sell your car/ballooning house mortgage/baseball card collection/equities portfolio in exchange for cash or a cash equivalent? Guess what? Equities are not all that liquid. While easier to unload than, say, baseball cards, you still need a third party to arrange the transaction, and this person needs to find a buyer. And secondly, do we really want to send the message to jittery investors that the best way out of this mess is to sell their shares? Of course not.

In terms of dud mortgages, they are even less liquid. Only the most daring investor would snatch up sub-prime loans. And, again, does the president want to be sending a message to strapped homeowners, regardless of their unworthiness, that they should just walk away from the new home, let somebody else pick up the loan?

Definition 2: our ability to cover our liabilities with cash. This is the bearish term (a less frequent usage during the current 25-year bull market), and certainly what the president's advisors were thinking when they whispered the term into Dubya's ear. It's certainly in our interest to know that the giant hole covered by negligent lending practices can be covered elsewhere by investors to produce that 'soft landing' effect we are now praying for. This remains to be seen, of course, though there are positive early signs thanks to that other market mechanism too dull for TV financial journalists to fuss about: monetary policy. Still, questions persist, including: You say there is enough liquidity now, but what if the crisis worsens? Will the central bank white knights continue to bail out the market?

Extricating ourselves from the sub-prime mess requires a thoughtful response, not dashing out hollow phrases and terminology to gloss over the troublesome parts. If not, we might start hearing a new word: panic. And everyone knows what that means.

Space Aliens Ate My Laundry!

On Aug. 27, Americans will get their last fix of the latest goss on Elvis and Bigfoot sightings, out-of-control space aliens and sumu wrestler-sized toddlers. Yes, the Weekly World News is going out of business. Trips to the supermarket, under the guise of stocking up on bread, soap and garlic (the only true defense against Vampire Boy), will never be the same. Nor will the journalism profession.

From the brilliant Washington Post tribute to WWN, Peter Carlson explains the editorial philosophy of the tabloid:

too many facts can ruin a good yarn, so [WWN editors] Pope and Clontz encouraged their reporters to embellish a bit. The reporters complied and started spicing up stories with lovely details that came straight from their imaginations. Gradually, true stories became half-true stories, then quarter-true stories, then . . .

"It wasn't like overnight we decided to start running fiction," Berger says. "We just added a few facts to a story and got away with it, and it went on from there."

WWN's writers had stepped out onto that proverbial "slippery slope" you hear so much about, and they gleefully slid down it, riding right to the bottom, giggling all the way. Soon they were producing "FAMED PSYCHIC'S HEAD EXPLODES" and "ELVIS TOMB IS EMPTY" and "HEAVEN PHOTOGRAPHED BY HUBBLE TELESCOPE," which was illustrated by an actual photo from the Hubble, enhanced just a wee bit to show a shining city so lovely it made dying seem like a small price to pay for admission.

I am tempted to use this space to blame the rise of mindless celebrity news for killing off WWN, but I'll leave you to ponder this at the check-out counter as you question whether or not there may be aliens among us, perhaps working the cash register. After the 27th, we may never know.

Best said in pictures

As Pete mentioned in the post below, Reuters photographer Namir Noor-Eldeen, 22, and driver Saeed Chmagh, 40, were killed a few weeks ago in a US helicopter attack. Reuters is asking for a full military investigation, a request that will undoubtedly go unheeded.

In the meantime, Reuters has posted a touching tribute to this young man's incredible work. Check it out here.

Back in Baghdad

A quick shout-out to one of ISB's favorite war correspondents, and all-around good guys: Pete Graff. He's left the war zone that is Islington and is back in Baghdad, this time for an extended tour...I've nicked this from the Reuters site (here's the original) because it's a sweet story about his first day back:


WITNESS-Soccer makes it the right day to return to Baghdad
Sun Jul 29, 2007 12:58PM EDT
By Peter Graff

BAGHDAD, July 29 (Reuters) - Looks like I chose the right day to return to Baghdad.

Five hours after I touched down in the Iraqi capital I found myself decked out in an Iraqi soccer team T-shirt, screaming my head off and dancing around the room like a madman with two dozen Iraqi colleagues in the Reuters Baghdad bureau.

We won the soccer.

Now, strictly speaking, as a non-biased journalist, I was probably not supposed to pick sides in the Asian Cup final between Iraq and Saudi Arabia.

But at the precise moment Younis Mahmoud, a Turkmen, climbed to head Kurdish team mate Hawar Mulla Mohammed's flawless corner into the back of the net, I was a partisan Iraqi fan.

Thanks to a stunning save moments earlier by Shi'ite Arab goalkeeper Noor Sabri, that single goal in the 71st minute was enough to clinch the Asian Cup over the much-favoured but clearly outplayed Saudi team.

Several of my colleagues wept with joy. Everyone chanted, clapped, screamed and hugged, releasing the sort of emotion that cannot possibly be explained by football alone.

Twenty two minutes later, when the referee called time, gunfire erupted across the city as jubilant Iraqis -- including some of the guards on our road -- began firing into the air.

BUREAU IN MOURNING

That morning before the match, when I had stepped back into the bureau after nine months away from Iraq, I was handed my green and white team jersey, with an Iraqi flag over the left breast. Today was match day and we were going to enjoy it.

Everyone had T-shirts. We lined up for a group photo. There would be a barbecue later, whether Iraq won or lost.

I went from room to room saying hello to the staff -- the photographers, cameramen, writers for our Arabic and English services, drivers, cooks, cleaners.

The bureau had changed: there was a new layout, fresh paint, new TVs and a handful of new faces.

But mostly there was a sense of mourning. Two weeks ago, Namir Noor-Eldeen, a gifted photographer at the age of 22, was killed in a U.S. air strike in Baghdad. So was Saeed Chmagh, one of the bureau's drivers.

That same week, a translator who worked for Reuters was killed by gunmen. His family have asked that we do not name him.

Their photos were up all over the bureau.

The game began with all of us crowded around a television set.

At halftime the game was tied at 0-0. I was sitting next to our office manager, sharing a tube of Pringles.

"So, how's it been?" I asked him.

Difficult, he said. "Since the guys were killed, they have been in shock. It is only starting to lift now, just barely," he said. "Three guys killed in two days. It's hard."

But our dead colleagues would have wanted us to celebrate. And that we did.

The final whistle sparked euphoric celebrations. In a small room at the back of the office, staff danced to Arabic pop tunes. Some of the drivers stripped off their soccer team shirts it was so hot.

On the wall were portraits of Namir and Saeed. Both of them were smiling.