Italians Vote “No,” Renzi to Resign, Banking Crisis Now Looking for Taxpayers

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

Teetering Eurozone banks exposed to flying shrapnel.

A constitutional-reform referendum on tweaking the way a country governs itself, of the type Italy held today, would normally not be a big deal for banks in that country, and particularly not for banks in other countries, and it wouldn’t have much impact on currencies and credit markets. But these are not normal times for Italy, which is in the middle of a vicious banking crisis, and they’re not normal times for the EU either, which has been grappling with a banking crisis of its own, even as it has begun to splinter, after the Brexit vote.

And it still wouldn’t be such a huge deal if Prime Minister Matteo Renzi hadn’t pledged he’d resign in case of a “no” vote.

Now the Italians have voted “no” by a resounding margin, according to preliminary results. Without waiting for final results, Renzi announced in a televised address to his compatriots that he intends to resign.

Renzi admitted that the vote had been a “clear” rejection of the proposed constitutional reform. “The experience of my government ends here,” he said. He’d meet with his cabinet on Monday and then turn in his resignation to President Sergio Mattarella (who might tell Renzi to give it a second thought).

Now all bets on Italy’s political, economic, and financial stability are, once again, off. And by extension, the stability – what remains of it – of the Eurozone.

Renzi’s resignation, if accepted, could lead to new elections later next year. During these elections, opposition parties that had campaigned on the “no” vote could surge, with the 5-Star Movement gaining additional traction. The 5-Star Movement has long campaigned on an anti-euro platform.

While the UK voted to exit the European Union, Italy might try to exit the Eurozone. This will be tough to do, and it will have daunting implications. Alone a serious discussion of this topic at the national level will spread uncertainty and fears of financial mayhem.

But until that election, a caretaker government would have to deal with the white-hot banking crisis, and some banks might collapse entirely.

The already beleaguered euro reacted immediately, dropping 1.17% to $1.0505, the lowest since the low of March 2015, which had been $1.0457. If it slips below that March 2015 low, it will mark the lowest level since 2003. It currently trades down about 1% at $1.056.

The largest 14 Italian banks – not counting the myriad of smaller banks – are sitting on €286 billion of “non-performing exposure,” as the ECB calls it. These loans, debt securities, and off-balance sheet items won’t be repaid. Banks still carry this toxic waste as assets on their books, and writing off this toxic waste and cleaning up their books would crush the banks’ capital officially – though in reality, it got crushed long ago – and take down the banks.

So banks have to find new capital to clean up the horrendous mess, but new capital has become scarce, given the horrendous mess.




The most urgent case is Italy’s third largest bank, Monte dei Paschi. It has already raised new capital twice in recent years, only to re-collapse. The third time is not going to be the charm, investors have decided. They’ve lost their appetite for losing even more money on this morass.

Now, according to the Italian daily Corriere della Sera, reported by Reuters, Italy is in secret discussions with the European Commission to allow a taxpayer bailout of the bank as early as next week. According to the current calculus, the bank needs another €5 billion to stay afloat, or else it might be “resolved” by regulators, which would likely entail some big losses for junior bondholders, which in Italy, are mostly retail investors who’d been suckered into buying these bonds.

This kind of bailout would require that Italy can issue bonds a low interest rates. But yields on its government bonds have been rocketing higher, making these bailout bonds much more expensive.

So sources at the ECB have also told Reuters that the ECB might boost purchases of Italian government bonds in case of a “no” vote and market mayhem that would drive up borrowing costs for Italy’s heavily indebted government. The bond markets will not be allowed to exude a sense of reality.

But the already complex – and ultimately very costly – task of dealing with Italy’s zombie banks, after years of brushing toxic waste under the rug, has become vastly more complex in the absence of a government with a mandate. Instability and uncertainty are likely to ricochet from Italy’s banking crisis to the Eurozone and its teetering banks, and beyond.

This is not to say that Italians won’t get through this. They will. They’ve dealt with crises, uncertainty, and instability before. They know how to get their money out of the country and out of harm’s way. But what they haven’t done before is foot the bill for their banks’ toxic waste.

Italian banks cannot be allowed, at any cost, to suffer the consequences of their own chronic mismanagement, or worse. Read… The Fix Is Already In, as Italy’s Moment of Truth Beckons




Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Share on RedditPrint this pageEmail this to someone

  73 comments for “Italians Vote “No,” Renzi to Resign, Banking Crisis Now Looking for Taxpayers

  1. Sporkfed
    Dec 4, 2016 at 9:31 pm

    This should make Treasuries a fight to safety and lower the yield tomorrow , correct ?

    • Bob
      Dec 4, 2016 at 9:44 pm

      I agree with that expectation, although all bonds will tank some day when the market gets serious about pricing in default risk.

    • r cohn
      Dec 4, 2016 at 10:22 pm

      For now ,yes
      Pre market indications are the 30Y yield at 301.8 down from 3.061 on Friday

  2. Wolf Is The Man
    Dec 4, 2016 at 9:41 pm

    Hey Wolf, I think your thoughts were the opposite from today’s result right.

    You thought Italy will Stay with Euros?

    what are your thoughts now, down the hill from here

    • Dec 4, 2016 at 10:45 pm

      As I said, the 5-Star Movement has campaigned in past years on leaving the euro. If the party gains more traction in the next election, euro membership will come up for serious discussions.

      There will be a lot of resistance in Italy and elsewhere to leaving the euro, IF it even can be done at all because there is NO EXIT CLAUSE in the treaties, and the issues that leaving the euro would raise are daunting; for example, bonds issued in euros will have to be paid back in euros, which becomes impossible once Italy has a devalued lira.

      So I think the chances of Italy leaving the euro are slim, but the discussion itself will cause all kinds of instability and mayhem.

      • d
        Dec 5, 2016 at 1:13 am

        “IF it even can be done at all because there is NO EXIT CLAUSE in the treaties,”

        Last time this was being kicked around for greece a large part of teh consensus was. That A state would have to, leave both Eu and Eur at the same time, the rejoin EU with it’s own currency.

        It is all very murky as it was intended as a no way out Ever Closer Union. Mechanism.

        It was a good short, I upped my Position after the Austrians voted Centrist, as there was no way the EU would get 2 win’s in a row.

        I dont trade the Eur that often its to disconected (Draggied) from its fundamentals..

      • Tom Kauser
        Dec 5, 2016 at 10:41 am

        Troika or j.p.morgan
        IMF in the lead?
        If j.p. morgan asks the people real nice , I am sure they will eventually embrace the bail-ins?
        Everyone is holding on too tight not to think there is a lot of impaired worth hidden on the balance sheets?
        Just ask Dimon!

      • raoul
        Dec 5, 2016 at 1:14 pm

        Hey Mr. Richter,

        As I understand it the Eurozone is a currency union and not a currency peg. As such there can be no leaving the union for any participating party, not the PIIGS, not Deutschland, no one.

        Doing so would expose vulnerable states to vicious attack and trigger derivatives most are unaware to even exist.

        An article fleshing out the details of ‘union vs. peg’ re: currency trading would be extremely helpful to those of us in the dark. I suspect that you are up to the task.

        Keep up the good work – love your site.

      • terry
        Dec 5, 2016 at 1:23 pm

        Lots of things happening these days that everyone KNEW could never happen.

      • Trygve
        Dec 5, 2016 at 4:24 pm

        But if they go for bankrupsy. Then the creditors would have to settle their claims in Italian courts. I think Italian judges would be quite pragmatical in their handling of these claims.

        This finance without losses cant go on.
        Finance is sucking to much money out of the economy as is, even if we ignore the GFC. It does not add to gdp, its a cost for living and commerce.

  3. dave
    Dec 4, 2016 at 9:44 pm

    just find a bigger rug. db bank got it covered. bail in, bail out, bail in and out.

    • Tom Kauser
      Dec 5, 2016 at 10:46 am

      D.b. has a huge position in a Chinese deal that values the bank much higher than the stock price?
      The deal is presumed to be worth 100 billion!

  4. nick kelly
    Dec 4, 2016 at 9:45 pm

    But remember- this democratic choice must, according to some, be the best choice because it was democratic.

    If the Prime Minister is an elitist, and how can a PM not be, then his rejection is good by definition.

    It’s kind of funny- all these upheavals claim Brexit as the parent, but the UK is now in chaos as it now emerges that there never was a clear plan to exit and millions who supported Brexit say they were conned by among other things the promise of huge savings.

    A second referendum? Good God no! Who in their right mind ever changes their mind? That wouldn’t be democratic.
    How about a referendum on having a second referendum?

    But at least the UK has a relatively stable banking system and a currency that remains for the time being a reserve currency.

    As Italy sails off into the wild blue yonder, it won’t be good for its banks, or its economy .
    But as long as those elites are brought down, that’s all that matters.

    If you don’t believe this, check the comments.

    .

    • Edward E
      Dec 4, 2016 at 11:00 pm

      It is because of Russia hacking into the ionosphere and generating excessive and annoying levels of Northern Lights. 😂

    • Jonathan Vause
      Dec 4, 2016 at 11:48 pm

      ‘the UK is now in chaos as it now emerges that there never was a clear plan to exit and millions who supported Brexit say they were conned’

      … not really feeling the ‘chaos’, tbh. of course everyone knew there was no agreement about what brexit even meant, let alone coherent plan for actually doing it, but that’s why article 50 wasn’t triggered immediately after the referendum – the plan is still a work in progress, but the deadline has always been march 2017, when formal notice to leave will be given. and support for brexit is now much higher than the referendum result (68% was the last opinion poll I saw). it’s not clear what your news sources are but you might want to consider upgrading them

      • peter forsyth
        Dec 5, 2016 at 6:01 am

        The plan is to spend enough time brainwashing those who voted to leave the EU so that they will offer only scant resistance to proposals of a second referendum. They are doing this in spades with help of the BBC, the MSM, and all the hype that flows from past failures such as Blair, Brown and Major, whose previous efforts at government wrecked the UK economy.

      • jerry
        Dec 5, 2016 at 7:31 am

        It will be the BBC which I no longer watch for obvious reasons but if I ever need to know where to buy Marmite I will tune in.

        I remember what I voted for IN or OUT, no soft crap or any other type of crap. Didn’t they get the Jo Cox memo. She represented a constituency that was 65% BREXIT yet she was going about supporting her own agenda. She forgot about the people she was meant to be representing and paid the price for her stupidity.

        The political class in the world today are crooks. They might want to read some history about what happens to crook politicians when the people have had enough.

        • AJ
          Dec 5, 2016 at 9:37 am

          “She forgot about the people she was meant to be representing and paid the price for her stupidity.”

          This is fascism pure and simple. It’s dressed up in self-righteous posturing, but I note the author can’t even be bothered to make the distinction between a vote in parliament (when an MP “represents” their constituents) and a vote in a referendum (in which every individual represents themselves by voting). I guess those kinds of subtleties have no place in a vision of justice motivated by hate.

          Jo Cox had just finished *meeting* with her constituents when she was murdered by a right-wing terrorist – a man with a long history of mental illness. She didn’t pay the “price” for doing something wrong (as if being stabbed and shot to death is ever a legitimate form of punishment for anything); she was murdered in cold blood because she exercised her democratic right to express an opinion.

          Jerry thinks that he has history on his side by valorizing such pointless, deranged acts of violence. He should read more.

        • d
          Dec 5, 2016 at 6:29 pm

          “Didn’t they get the Jo Cox memo.”

          As you see to consider this sort of behavior acceptable perhaps somebody should line up the brexit MINORITY and shoot the lot of them. Starting with you.

          NO more problem.

          Brexit voters are a MINORITY of the total voting population.

          WW II in particular. Was fought to prevent people delivering “Joe Cox Memos” to Minorotys.

      • nick kelly
        Dec 5, 2016 at 10:53 am

        You are correct that approval seems to be up, only problem seems to be with employers, especially exporters of goods and the much hated banking, insurance and finance sector, the world’s best. Brexit now has Frankfurt and Paris salivating to replace it.
        But that will just hurt high- flier London- that just happens to pay one third of UK taxes.

        They did have duty free access to the world’s largest market and they will now have…what? No one knows. Remember, there isn’t a British car industry but there is a car industry in Britain. They are branch plants, they could be anywhere. Most of them are there because of access to the world’s largest market. They were built for a market of 350 million, not 60.
        So the latest big secret in the UK is: what assurances were given to Nissan, who were considering moving their plant? Since they seem to be mollified, it would seem to have been a promise that any duty they have to pay to enter the EU will be covered by the UK taxpayer.
        But how many exporters can the tax payer afford to insure against the consequences of his choice to leave the world’s largest market?
        And has anyone polled the one million Brits living in Spain, who at this time have no clear status?
        According to the government, which is the executive that has to deal with this, not a pollster, it may be necessary to hire 35,000 civil servants to determine and negotiate what will replace membership in the EU.

        To me this is chaos- whatever the lads down at pub think.

        And none of this had to happen- there were all kinds of ways to negotiate within the union. Do you think if the UK refused entry to Syrian refugees the EU would have expelled the UK? There is no provision to expel a member. It would have been quasi-normal friction.

        It was the referendum that was the mistake. Thinking that the work of experts over decades could be summed up by asking: ‘Are you happy?”

        But one thing is certain, the UK is a hell of a lot better off on its own that Italy would be.

    • Ian
      Dec 5, 2016 at 2:55 am

      “the UK is now in chaos”

      This is of course what the majority of the media would like us to think. They are doing everything they can to sow doubt. But there is no doubt, the minds of the people has not changed and we watch with interest all those trying to undermine things because if they are in any way successful we will simply move down the voting food chain till we get what we want.

      • d
        Dec 5, 2016 at 3:18 am

        ” if they are in any way successful we will simply move down the voting food chain till we get what we want.”

        No you wont.

        You are already at the bottom of the voting food chain.

        Weather the next is through an election or another referendum all those apathetic voters have been give a wake up call.

        they will,be registering and voting.

        IN.

        The campaign however has had teh desired effect the Eu EX Junker knows it has to give England and itself a better deal on immigration.

        And further it has to change freedom of movement.

        To freedom to move to a job you have obtained, in a place that has a genuine skill shortage, not a labour cost issue, you can help resolve.

        Not freedom to go and steal somebody elses job, by undercutting the going rate.

    • Tom Kauser
      Dec 5, 2016 at 10:53 am

      The next referendum will be from the IMF the people have spoken overwhelmingly for bail-ins inadvertently and the next guy will be a technocrat and the beatings will commence?

    • Arctic Melt
      Dec 5, 2016 at 11:58 am

      It’s a good thing that a political clown can’t con the voters in the United States!

      • Terry
        Dec 5, 2016 at 1:32 pm

        Seems that at least one person was conned.

    • nick kelly
      Dec 5, 2016 at 12:55 pm

      ‘Leaving the single market would be damaging to almost every sector of the British economy, from manufacturing and energy to retail and financial services, according to a report commissioned by an alliance of Conservative, Labour and Liberal Democrat politicians trying to stop a hard Brexit.’

      From today’s Guardian

      • nhz
        Dec 5, 2016 at 2:01 pm

        what else to expect from one of the main sources of ‘fake news’ :-)

        • John Doyle
          Dec 5, 2016 at 2:28 pm

          According to MishTalk leaving the EU is simple. Definitely don’t use Clause 50 as that has a lot of difficult consequences. Just say you are leaving, period. Job done!

    • TS Elliot
      Dec 5, 2016 at 4:42 pm

      ” But as long as the Elites are brought down thats all that matters ”

      Hmm .. sort of like how the Elites were ‘ brought down in Germany 1934 ? Russia in 1917 ? Spain in 1939 ? Cuba in 1959 ? Or perhaps Venezuela in 1997 ? Italy in 2001 ?And now us [ US ] in 2016 ? Yeah .. those all worked out real well . Remove the villainized elites and replace them with genuine villains , thieves and thugs more than willing to rape and pillage the country to their own gain . Rule number one when it comes to politics . The only thing that abhors a vacuum more than Nature is Politics . With more often than not that vacuum filled by a demigod absolute rule fascist dictator . Ahhh the dreams and delusions of the eternally ignorant . Eyes Wide Closed and stumbling thru life with nary a clue

      • d
        Dec 5, 2016 at 6:58 pm

        You forgot the Big one that made it all acceptable.

        Like so many other global diseases, republican revolutions, aka Slaughter and robbery of the haves. Started in france, with the Bloody terror.

        It didn’t work long term then, and it wont work now.

        • nick kelly
          Dec 6, 2016 at 5:31 pm

          At least the French Terror ended, after a year and about 70,000 executions.
          The Bolshevik Terror, begun under Lenin and ramped up by Stalin lasted until his death.
          70,000 is mere blip in this one.

  5. economicminor
    Dec 4, 2016 at 9:57 pm

    I have read that some US banks have considerable investments in Italian banks.

    • Tom Kauser
      Dec 5, 2016 at 11:10 am

      J.p. Morgan has put in a reasonable amount of time to eliminate federal reserve involvement and has dispersed funds to the banks representative Mr. Jamie Dimon to make the customs offer of two American dollars when required to save said banking system?

      • Chicken
        Dec 5, 2016 at 5:22 pm

        I just read that 3 times over and it has some kind of error in it I simply cannot flesh out.

        Europe’s EU is done for guys, all else is more lies. Don’t tell the Germans though, they’re getting stuck with the bill and thus should be last to know.

        US Banks hopefully will also pay for their evil deeds, I’m still waiting for this to happen based on the theory reciprocity is absolute.

        BTW, see how easy expressing ideas using words can be?

  6. NotSoSure
    Dec 4, 2016 at 10:15 pm

    Dow 30K is nearing. I kid you not. Not trying to be sarcastic. Every rejection of the status quo has eventually been followed by a rally later on. Sure the Dow dropped 3.4% but afterwards it rallied to a new high.

    The stock market is forward looking and it’s telling us that the future is super bright. If the Eurozone disintegrates then Northern America will be the biggest economic region in the world? If it does not then it’s business as usual. Either way we are all covered to the moon.

    • night-train
      Dec 5, 2016 at 4:03 am

      In theory, the stock market was once forward looking. It also once was supposed to factor in risk. Now, it does neither. It just looks to the Fed. I won’t venture a guess as to how high the market can or will go. It isn’t backed up by very much solid investment though. So it can go very high. It can also go very low. I had rather put my money in Spam and crackers. I can use those in any event.

    • MC
      Dec 5, 2016 at 4:05 am

      US stocks have become what was once called a “haven investment”: it’s where people and companies go park their money to keep it safe.
      Yes, I understand this sounds puzzling, and it is, but securities markets have been gutted by years of central bank activism and housing has become a minefield, especially now that prime markets are nearing the top and that years worth of supply loom at the horizon.

      And while stocks are not exactly safe, they are at least very liquid: they can be sold at any time, even damn right now if one is ready and willing to take what the market is offering for them.

      • jerry
        Dec 5, 2016 at 7:42 am

        You are right, people are not investing at the moment, its about keeping what you do have safe. You want to see the DOW & S&P go to the moon, wait for panic to set in the bond markets.

        ALL WESTERN GOVERNMENTS ARE BROKE and all they can do is spin plates. Maggie Thatcher was absolutely right, the trouble with socialism is eventually you run out of other peoples money. The baby boomer are retiring, 10’000 a day in the USA. They were taxpayers but now an expense. Why did Merkel let in all those refugees because socialism is a ponzi scheme, you always need new suckers in at the bottom. Socialists will destroy their own country to keep the socialist dream alive.

        Its over folks.

        • Tom Kauser
          Dec 5, 2016 at 11:31 am

          You have a much better chance expecting panic at the disco than panic in the bond market?
          Champagne cocaine and gasoline and most in between…… Federal reserve put is strongest in the bond market ?
          How is that ongoing turf battle with the fed playing out 4U?

    • Frederick
      Dec 5, 2016 at 4:30 am

      Not really The Euroasian region with the “New Silk Road” will be far larger but good try Your name fits

    • Tom Kauser
      Dec 5, 2016 at 11:24 am

      Over the last 9 years everyday the media starts and ends with the stock and bond market bubbles are about to burst!
      It goes to -30000 first!
      And most miss the buy?

    • Arctic Melt
      Dec 5, 2016 at 12:03 pm

      Yah!!!!! This is a new economic dynamic for a new age of American wealth and it’s all floating up to the top floor of the Trump Tower. We can all look up to our leader now as all our remaining wealth trickles upward.

  7. r cohn
    Dec 4, 2016 at 10:18 pm

    An exit of Italy from the Eurozone would mean the end of the Eurozone and the end of the Euro as its currency.This is not going to happen now so the rules will be bent for Italy to bail out its banks and then for Draghi to buy more Italian bonds.

  8. Al Tinfoil
    Dec 4, 2016 at 11:32 pm

    Any truth to the rumor that Italian bank regulators are seeking the advice of President Maduro of Venezuela on how to solve their bank problems?

    • MC
      Dec 5, 2016 at 4:08 am

      As my Italian relatives told me, once oil prices came crashing down and the bread lines got longer, Venezuela disappeared from Italian media overnight after years of being toted as second only to Cuba in the utopia club.
      To paraphrase two famous sayings, nobody loses friends as fast a Socialist politician when he runs out of other people’s money.

    • Tom Kauser
      Dec 5, 2016 at 11:33 am

      The fed is controlling Venezuela!

  9. Bob
    Dec 5, 2016 at 12:53 am

    Italy might leave the European, renegotiate its debt, then start fresh with a manageable debt load and potential for high GDP growth. The bankers would be giving them more loans in three years if needed because they always find ways to transfer the risk.

    • Tom Kauser
      Dec 5, 2016 at 11:36 am

      I got a belly laugh when I replaced Italy with ‘merica!

  10. Dec 5, 2016 at 12:56 am

    (Sigh .. )

    If the Italian government can issue interest paying collateral for loans from private banks (by way of Target2 or the ECB) it can offer direct ‘greenback’ repayments without adding the liabilities that borrowing from finance entails.

    The banks would object — they want blood from the Italian citizens — but they didn’t lend blood, they offered electronic entries on ledgers. Let the banks take a ledger repayment or go out of business. The banks would object but what is their alternative?

    Exactly, they have none.

    The foolishness of the Italians knows no bounds, ditto for the EU banking establishment that wallows in misery knowing there is no way out.

    Of course, the Italian’s ‘external drain’ won’t end until the Italians get rid of the freaking cars and the 1.1 million barrels of crude oil the Italians import from stalwarts like Iran, Saudi Arabia and Islamic State in Libya … These barrels arrive every single day, paid for with all those borrowed euros.

    Keep the cars, go belly up, then lose the cars anyway. De-industrialization is a bitch but there it is: you can’t argue with physics.

    • Jonathan Vause
      Dec 5, 2016 at 1:49 am

      strange, given that Italian crude oil consumption was reported a couple of years ago to have fallen back to levels last seen in the 1960s, when the population was ten million less than today – if people were making similar arguments 50 years ago I must have missed them. of course switching to solar-generated electric cars would likely be a plus for the Italian current account balance given its geographical location, but that isn’t going to do anything to address the chronic lack of across-the-board competitiveness of Italian industry compared to Germany, and as devaluation isn’t an option there’s no choice but to grind wages and rents down the hard way, while government debt continues to compound way past the point of no return

      • rich
        Dec 5, 2016 at 6:06 am

        Unlike Sweden, Italy has pretty much a cash (rather than credit and debit card) economy. There have been more than a few bank runs since the summer. This “no” vote will probably increase the number of bank runs.

        “there’s no choice but to grind wages and rents down the hard way, while government debt continues to compound way past the point of no return”

        Compared to what it costs to buy a rental property in Rome, rents are already very cheap. It doesn’t seem to make any sense to buy rental properties in most of Italy. If rents go any lower, landlords will go out of business.

        Other than for the grinding down of rents, the same can be said for what’s already happening in the U.S. , in terms of grinding wages and compounding debt. That said, with the overbuilding of apartments in many American cities, the law of supply and demand will force rents down, anyway.

  11. Realist
    Dec 5, 2016 at 1:44 am

    In the end the referendum was either pro Rentzi or against him after he did tie his political future to the result of the referendum. And the Italians apparently wanted him out on basis of the voter turnout.

    Interesting times. Whoever will be Rentzi’s successor, he/she is screwed already.

  12. disc_writes
    Dec 5, 2016 at 4:15 am

    Wolf, I understand you need to give your articles an exciting spin, but Italy is not going to leave the Euro of its own initiative.

    A referendum on the Euro will fail for obvious reasons, and Italians would rather burn their own right hands than give control over their currency back to their own politicians.

    Nor will M5S win the next elections: it will be ring-fenced into opposition. The Italian political system has kept a much better-organized Communist Party out of national power for 50 years. The populists make no chance.

    That is not to say that the situation will not get so bad that Italy will be forced to issue its own currency, or that the M5S will be the only political entity left (next to, say, the Church and the army). It might happen. But it will happen through a catastrophe, not a referendum.

    This is not a new domino falling to populism, as the press has interpreted it: it is just another Italian government resigning.

    Then we’ll have another caretaker government. Then we’ll have new elections. Then another fractious government, which will last a few months. Then a new patched-up government, and so on.

    Move on to more interesting news, nothing to see here.

    • d
      Dec 5, 2016 at 4:26 am

      “Move on to more interesting news, nothing to see here.”

      If big Italian banks start falling over due to this badly timed political play there will be plenty to see.

      • disc_writes
        Dec 5, 2016 at 10:00 am

        The referendum will cause nothing of significance.

        A new government can be formed within days – chances are, the plans were already on the table before the referendum.

        The new government will have even less an electoral mandate than the current one. Its only mandate will be to prop up the status quo until the elections in 2018 – in the meanwhile, it will be free to do whatever the Troika tells it to do as a tit-for-tat to keep the banks alive.

        In the meanwhile the parliament and senate will write a new electoral law to keep MS parties in power, and the populists out.

        If you do the investing thing, the next couple of days would be a good time to buy worthless Italian pieces of paper – do not hold onto them for too long, though.

        • d
          Dec 5, 2016 at 6:51 pm

          MDP is now head for bail-in.

          Thanks to the NO vote.

          Hopefully it will be the first of many Italian bail-ins.

          Banks with big NPL ledgers are supporting the Zombie company’s .

          The economy can not recover and other healthy company’s are destroyed by unfair competition from the Zombies. Supported by the bank’s allowing them to keep running their NPL’S.

          Top fix the economies, wind up the NPL’S, also this will entail winding up some bank’s.

    • Frederick
      Dec 5, 2016 at 4:32 am

      Isnt that the way its always been politically in Italy?

  13. RalphZ
    Dec 5, 2016 at 4:50 am

    Just to think that yesterday, according to mainstream media headlines, the EU was congratulating itself for “its” victory in the Austrian presidential election.

    Yes, the EU is very happy that 46% of the voters in one of its Member States support an extreme-right candidate. (We’re not talking about a populist here, but practically a neonazi).

    On a side note, has anyone noticed any propaganda for the “yes” at the italian referendum (outside of italian media) ?
    Here in Belgium, I haven’t seen any, despite a very strong italian community living in the country…
    Looks like the EU’s propaganda budget had dried up, after bullying voters against the Brexit and against Trump…

    • MC
      Dec 5, 2016 at 5:29 am

      Could we please stop this whole screaming Neo-Nazi at every little thing that isn’t Social-Democratic orthodoxy?

      I remember back in the 90’s the Italian and French gauche-caviar types were already denouncing the FPOE as the second coming of Hitler and demanding force be used to eliminate the party. I kid you not.
      Democracy is fine only when people vote what we tell them to vote. That’s the EU philosophy.
      Here we are two decades later and I don’t see anything other than the peculiarities of Austrian politics, which should not worry anybody as they have their peculiar language which may seem “extreme to outsiders” but that’s just that.
      Rest assured both sides of the political spectrum wholeheartedly agree on keeping on milking EU funding as much as humanely possible and devaluing real wages to keep foreign investors (chiefly German) happy.

    • Jonathan
      Dec 5, 2016 at 6:52 am

      Maybe because people find it refreshing to hear the far right than yet more leftist double standard PC bullshit?

  14. marco
    Dec 5, 2016 at 5:28 am

    People of privilege will always risk their complete destruction rather than surrender any material part of their advantage.

    John Kenneth Galbraith

    • Jonathan Vause
      Dec 5, 2016 at 6:39 am

      always thought that quote was a bit imprecise – ‘people of privilege will always be unwilling to voluntarily surrender any material part of their advantage, but may be induced to do so reluctantly if the perceived risks of trying to hold on to the advantage become too great’ would be a bit more like it, bcz elites do in practice make compromises when placed under duress all the time, even if they fight like tigers to keep as much privilege as they can get away with. there’s a difference between accepting a minor risk of the guillotine and a very real probability – given the second, many have grudgingly accepted a minor redistribution of wealth and power from themselves to the plebs

  15. RvC
    Dec 5, 2016 at 5:39 am

    Bye Renzi but hey… hasn’t Italy at least some experience with launching Goldman excecutives in a business Cabinet?

  16. Jonathan
    Dec 5, 2016 at 6:46 am

    As the wise men said, everything is always “contained” or “under control” until shit hits the fans.

    • Edward E
      Dec 6, 2016 at 10:09 am

      That’s a lot why Italy is shaped like a boot. All that shyt could never fit in a tennis shoe!

  17. Sound of the Suburbs
    Dec 5, 2016 at 6:48 am

    I know lets bail out the bankers and impose austerity on the people.

    There is money for bankers but not for you.

    What could possibly go wrong?

    • jerry
      Dec 5, 2016 at 7:55 am

      I would like to see some of these banksters go to jail for their fraud.

      • Me
        Dec 5, 2016 at 10:39 am

        Paper currency is the Fraud

  18. Greatful again
    Dec 5, 2016 at 9:32 am

    The trend is clear….rejecting status quo

    • Frederick
      Dec 5, 2016 at 2:23 pm

      Thats a fact thankfully I mean TPTB have been so great for us middle classers right? But the MSM will try to blame that on Putin too Im sure

  19. Gabriel
    Dec 6, 2016 at 2:36 pm

    For perspective… there are roughly 500 hundred million people in the EU. A $5 billion taxpayer funded bailout would cost every man, woman and child $10 to bail out one Italian bank. Thank God there aren’t any other banks that need taxpayer assistance! That could get expensive.

    • d
      Dec 6, 2016 at 4:26 pm

      Only $ 10.00 then anothe r10 and anotheritaly needs 500 Billion no 5.

      Sothats at least a $1000.0 per person. JUST FOR ITALY.

      Who gave you, or the EU, the wright to take my money and give it to your incopetent theiving cronys???

      Why is a entity that is so poorly manged it becomes insolvent entitled to assistance from the tax payer.

      Put it into statutory management.

      Transfer all depositors funds and accounts to a healthier entity. No FDIC/Insurance payout required.

      Then wind it up, pay to bond and shareholders what is left if anything.

      Just like chinese steel production, there is overcapacity in Eu and particularly Club-med banking.

      MDP is simply a mismanaged symptom of it.

      Time to rid Europe of its Zombie entity’s.

      Along the way you will also kill off several,if not most Mafia ones, as they all have BIG NPL’S

Comments are closed.