Need cash in Italy? You know who to call [Cousin Vinny]
I’ll admit I’m pretty naive about the current status of the mafia. Not having my own run-ins with the mob here in America, except on TV and the big screen, I was pretty sure the mafia was relegated to folklore. While I knew from news stories that it definitely had its time in the U.S., Italy and other parts of the globe, I thought it had run its course and was now just a loose network of wannabe thugs calling themselves “godfathers”.
Alas, according to this recent Washington Post story “As Italy’s Banks Tighten Lending, Desperate Firms Call on the Mafia” (free registration may be required to read), the mob is alive and strong in the motherland as evidenced below:
The salesman said he has since moved away because of threats from the loan shark. Once when he made a partial payment of more than $5,000, the man scoffed at him and said that sum “had as much value as a cup of coffee.”
The salesman said he blames banks for pushing people like him into the arms of the Mafia.
“If they would be a bit more open with their credit, many people wouldn’t fall into this trap,” he said. “They only give money to those who already have it.”
The article states a number of instances where loans are being made at 120% annual interest. So, if you borrowed $10,000 to keep your little coffee shop going, you better hope you have doubled your income to pay off the loan shark. Unfortunately, due to the slumping economy across the world, business owners who think sales or sponsorships will pick up are slapped with reality when they see even worse sales.
And then come the threats and broken knees, literally.
But don’t think the mafia is just a couple thugs making headlines with their brutish methods for extracting payment. No, the mob is in BIG business:
Confesercenti estimates in a new report that organized crime syndicates — including Naples’s Camorra, Sicily’s Cosa Nostra, Calabria’s ‘Ndrangheta — collect about 250 million euros, or $315 million, from retailers every day.
$315,000,000 EVERY DAY! Granted, the mob has assets they need to pay to manage, and a payroll to fulfill, just like any other business. That’s not pure profit.
The few stories they highlight only hint at the problems Italy’s business owners are in, and it only looks to get worse. As I said, shopkeepers think they just need enough money to get by for a month or two, and can then pay it right back, but get themselves into a hole. The mafia isn’t the type to use legal proceedings to get their money back in court, though. Instead, they start with threats, then quickly move onto kidnapping, violence and, eventually, killings.
And you thought our payday loan shops here in America were sleazy and evil. Sure, they might resort to trickery to extort insane amounts of interest out of you, but you usually don’t have to worry about the safety of your wife and kids if you miss a payment.
Vinny Scordo from Scordo.com says
No, I’m not THAT Vinny!
The mafia is a very complicated entity and very entrenched in Italian society (they’re actually part of the functioning economy in many parts of the country and especially in Southern Italian provinces like Calabria, Sicilia, etc.).
For a good primer on the mafia in Italy see Roberto Saviano’s book Gomorrah (http://en.wikipedia.org/wiki/Roberto_Saviano).
Wow! Apparently Italy’s illegal economy is about 27% of their GDP. Pretty impressive that they can function at all with that kind of corruption.
Every country has its own version of the Mafia. They indulge in many of the so called activities and rake money. Then they invest in legitimate activities to wash their money. Along the way they find power.
Malaysia has a whole lot of these street lenders with the signs advertsing their “cheap”, quickly processed and little documentation required loans. Cheap would be any number > 30%, I suppose.
Many do borrow from them, pay back and life goes on. For the few that default, then the consequences are dire.
Kristy @ Master Your Card says
I knew some form of the mafia still existed, but I wasn’t sure to what extent. This is pretty interesting. It’s a bad sign, though, when people are willing to take their chances with the mob. The idea of paying 120% is pretty daunting, but the idea of having my legs bashed in if I can’t is even worse. I bet these business owners have given up sleeping.