Wednesday, December 3, 2008

Bank Of The Mafia

According to the BBC, luckless business owners in Italy are having to seek alternate sources of funding in order to keep going in these credit-constrained days. In short, when Banko di Highstreet fails you, turn instead to the Banko di Cosa Nostra.

In the radio version of the story, the reporter cited the case of a business owner who went to his local bank to request a loan of 50,000 Euros in order to continue to operate. The bank told him it would take 5 to 6 months to gain approval, terms that if he could accept would of course mean that he would not need a loan in the first place. Instead, he went to the Mafia. Next day, someone showed up with 50,000 Euros in a black plastic bin liner, and he signed up for a very reasonable 4.5% interest rate.

Now you know what's coming next, right? This is all fine so long as you make the payments and hence keep those large, young men, in their nice suits and flash cars, all smiley and happy. Alas, he could not perform, repeatedly borrowing more and more to try and stay afloat until he had outgoings of 160,000 Euros per month just servicing the debts.

Unfortunately, the BBC didn't close this story out by saying what happened next but you can bet whatever it is you value highly that he didn't just declare bankruptcy and walk away into the Italian sunset. Indeed, I doubt he's walking anywhere at all, any time soon....

Right now banks might be a royal pain in the rear end, but at least it's not a terminal condition.

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