Is Italy the next domino to fall in the European Union?
The perennial sick man of Europe – where growth has been slower than Japan for over 15 years – the country may be finally getting fed up with business as usual.
Its young and telegenic prime minister, Matteo Renzi, is desperately trying to reform the system, but it may be too late.
At the heart of the matter is a new constitutional referendum that is intended to streamline decision-making authority. It would shift power from the chaotic regional governments to the national executive branch.
Originally seen as way to reform Italian politics, the referendum instead has become a proxy for the status quo of Pan-European unity. And it is quickly losing support among the fed-up populace.
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| Euros could become collectors’ items if Italy joins Great Britain in exiting the European Union. |
Much like in America, the populist uprising in Italy has seized upon this proposal as just another force-fed solution from the elites. And it’s been met with vociferous opposition by two Euroskeptic political parties – the conservative Northern League and the Five Star Movement.
The ever-colorful leader of the Five Star party, the former comedian Beppe Grillo, proudly noted: “We are the barbarians! The real idiots, populists and demagogues are the journalists and the establishment intellectuals.”
It is this sour sentiment that Mr. Renzi now faces as he desperately tries to save not only this initiative but also his political future as well. A loss on the referendum would no doubt trigger a no-confidence vote relatively quickly for Renzi’s Democratic Party, which could bring the Euroskeptic bloc to power. Never one to shy away from the fight, Mr. Renzi has tried to flip the tables on the opposition by casting himself as the agent of change and noting that a vote for no “means nothing changes.”
Whether he can turn his fortunes around remains to be seen. For now, Mr. Renzi’s “yes” side is behind in all the polls. But he still has time to rally the troops by December 5, when voting takes place.
| “If the forces of Euroskepticism take over Rome, there is no way that the euro could maintain its status as the single currency for 500 million European citizens.” |
The vote could have powerful consequences in the currency market. A “no” win isn’t going to trigger an instant exit out of the euro, but it could lay down the foundation for such a move.
Italy is the third-largest economy in the eurozone, and if the forces of Euroskepticism take over Rome, there is no way that the euro could maintain its status as the single currency for 500 million European citizens.
So, we will be watching with bated breath as December 5 comes around. Divorce Italian-style may be the latest salvo against the post-World War II economic order and it could be a bigger headache than anyone imagined.
Happy Trading,
Boris Schlossberg
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It’s Eurover over there!
Agree
And maybe we’ll all be able to afford a Ferrari. But it’s going to be a shock and a lot of money is going to move to the US.
Could be that a lot of money is simply going to vapourise as Italian banks go bust
No need to worry, the cost of a Ferrari isn’t going down.
Dear Boris,
I recall your article the morning after the UK (including me) voted for Brexit in our referendum. As I recall you suggested we had pretty much taken leave of our senses. I wonder whether your overview of the UK’s vote looks different to you now.
David, You hit the nail on the head brother! Boris seems to love all things that removes our right to throw out the global elitist from our own countries. Here is a catchy new label for Boris to use in place of “populist”, It is called “PATRIOT”!!
We’ve been using it over here in the USA for over 200 years now to great effect against wanna be Tyrants.
God bless
J
As with Brexit and the Trump win in the US, the masses are awakening, the masses are sick and tired of the self proclaimed “elites” telling them what is good for them. Remember the people who have been telling Americans what is best and that we must agree, are the very same people who had been telling us for at least a year that there was absolutely no path for such a fool as Trump, are the very same people who Trump has made a fools of.
I was just got out of my suv yesterday and i was walking towards my favorite store yesterday and the anti trump protesters were out about 20 of them a group of three of them got directly in my face and yelled LOVE TRUMPS HATE they were so close my ears were ringing and i could smell their breath i tired getting past and they pushed me one guy pushed me right in the face any way i pushed them aside and yelled to them maybe …..BUT TRUMP TRUMPS LYING HILLERY
All indications are that the vote is going to be close! Therefore, regardless the outcome, more division and polarization is going to manifest in the behavior of the populace. The effect on a unstable Bond market will simply grow worse! Change is now in the air, the markets are going to price this instability in everything….!
“Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.â€
― Warren Buffett
———–Looks like we should all get as far away from the Euro as possible!
The negation of negation? Just like the Soviet Union?
The unraveling of this fairytale EU would be the best thing for all Europeans. Their strength is their cultural and national diversity.
Absolutely right. It’s taken about 5 years more to come than I thought.
press the button!
YES!!! lets give another kick in the ass to the globalists!= brexit, trump, Italy! dismantle the debt dependent capitalist control system.!
From the look of your stock indexes the phantom stock rise party is back in full swing. Yes they have kicked the arse of fundamentals out the door. The American market after a bit of a hiccup is steaming full speed ahead earnings etc be damn and Europe and Asia keep dancing to the same American tune which is hope placed in an unknown quantity called Donald Trump. How utterly stupid. Unbelieveable.
No matter what the vote is, the fact is that the EURO will not survive . It is only a matter of time .
I am looking forward to seeing these unelected prats getting kicked out .
Hey Boris,
Could you please explain what would happen if the euro currency dissolves.
Eg,
What would happen to Italy with the Lira,
And the rest of the European block if they have to reinstate their original currencies.
Is that the most probable outcome, or is there an alternative.
What would it look like from a practical point if view.
Thankyou regards Luke
This a no brainer,regarding Italy,carry on down the same path for another 40 years,or want a change,Well we know whats happened the last 40 years,its been a disaster ruled by Germany slowly but gradualy been dictated to,now is a chance to break away and say,” listen to me for a change cos your wrong”Lets get back to the old common market, if not,the world is your oyster
For everyone that keeps on saying that the Euro is dead, why didn’t Greece leave?
Greeks hated the austerity imposed by the Germans, they demonstrated, they rioted…but when they were given the free choice to leave the Euro…..oops
The Southern European Countries complain about the austerity, curse the Germans, but ……do not want a new currency that will crash, condemning all retirees to 50% spending power hell in their final years, and they do not want to lose the massive subsidies paid by the northern european countries. As the demographics for Southern European continues to become worse, more and more of the % population will be dependent on pensions, so whatever the folks vote, they do not want to lose their Germany supplied safety nets
Currency devaluation only works if there is a young vibrant population to work the advantages, to counterbalance the disadvantages
oh, and UK did not leave the Euro with their Brexit vote, because they were never n the Euro-zone.
Because austerity hasn’t been that bad, in comparison to no bailout. Yes they want the “free” money promised by the elites. That’s the reason why they joined the EU in the first place. They haven ‘t yet decided they want to compete and step into the world of taking care our themselves, much as the US, living on one’s own initiative and within one’s own means.
Just listen to the mainstream news for a couple minutes and you can tell which way the vote will go, the opposite their prediction.
Al McNal is, I’m afraid, just another deluded man if he even thinks that the US is living within it’s own means. What happened to the trillions of dept the country and most Americans have?
If Trump gets US COMPAnies overseas to bring home their Trillions and pay 10% taxes, it should get our US economy moving again. Can that overcome the Godzilla debt, and his big brother, Unfunded Liabilities? Let’s hope yes. If not, it’s not the end of the world. All these people bitchin about not being supported as well as they’d like, are already living better than I did as a kid during the Depression. They get by, unless they riot some more.