Absolute Return Partners: Much Ado about Nothing  June letter: “Italy’s Berlusconi was sentenced to 7 years in prison for having frequented an underage prostitute and for abuse of office, as he helped the young lady out of prison claiming (falsely) that she was the niece of a former Arab leader. Berlusconi will appeal the verdict and the appeal has suspensive effect. At the same time, he is about to run out of appeal possibilities in a conviction for tax fraud, and that one is in fact far more serious.

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If there is still anybody who is uncertain that Berlusconi’s real political intentions are to keep himself out of jail, they only need to look at his party’s response to the judgment. PdL has threatened to topple the government – without actually specifying why. In return, Berlusconi made it clear that he would find it appropriate if President Napolitano appointed him senator for life. It would confer life-long immunity upon him.

It is entertaining, but not exactly what Italy needs. There is a more acute problem which threatens to cause unrest. According to the Financial Times (and I have previously referred to the same story in 2012), there are clear signs that Italy has lost large amounts of money on derivatives positions, seemingly intended to conceal the real state of government finances. Worse yet, the story seems also to point out that Italy falsified the budget deficit leading up to the introduction of the Euro.”

Political incompetence

So writes Kim Asger Olsen of Origo Asset Management in one of his recent missives (you can find his work here). Kim is an astute observer of political and economic events, and I can only agree that Italian politics are high on entertainment value but low on quality.

Absolute Return Partners: shareholder letter embedded below.

H/T: ValueInvestingWorld.com

The Absolute Return Letter 0713 by ValueWalk.com