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  1. #1
    Members larus's Avatar
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    Italian Constitutional Election - Dec 4th. Potentially another BREXIT/Trump moment?


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    With the last 4 polls all pointing towards a rejection of the constitutional changes being requested by Renzi, how serious an impact to the EU, EURO and financial markets will this be if this happens?

    Are the warnings being over-played by the Yes side (as per both sides in the Brexit debate) or could this really impact the stability of the EURO and Italian banks, which have very high levels of non-performing loans (about a third of the entire EURO area non performing loans)?

    Putting the Brexit/EU debate to the side for a while, this does feel like a continuation of the 2007/8 Financial Crisis, as all that seems to have happened is the bad debts from the banks have been moved to governments (which Italy hasn't done and therefore the banks are more exposed), and led to more indebted nations and an insane policy of QE (money printing in reality) and negative interest rates.

    The national debt in Italy is circa 130% of GDP, it's economy has performed badly since it joined the Euro in 1999.

    Year GDP Growth Rate
    1999 1.464
    2000 3.693
    2001 1.773
    2002 0.251
    2003 0.153
    2004 1.583
    2005 0.95
    2006 2.006
    2007 1.474
    2008 -1.05
    2009 -5.481
    2010 1.711
    2011 0.587
    2012 -2.77
    2013 -1.698
    2014 -0.417

    There appears to be concerns that the markets will not want to buy Italian debt with the political instability likely to ensue in the case of a No vote.

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    • #2
      A. Virgo, Football Genius
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      so you're suggesting the polls are wrong again and they will accept the constitutional changes?
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      Pollsters have got 2 out of 2 wrong so far - so maybe they will make it a hat trick & Italy will accept the changes their pm wants
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      Not so much the 2008 crisis as the current and ongoing eurozone crisis since 2011. Country gets into debt, cannot devalue is way out, cannot bail is banks out, trapped between a rock and a hard place with nothing to do but raise taxes and endure more hardship. That's monetary union without fiscal or political union in practice.
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      All happening on Sunday as it's the re-run of the Austrian Presidential election on December the 4th too. The far-right Norbert Hoffer is the favourite to win.
      Each to his choice, and I rejoice the lot has fallen to me
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      Quote Originally Posted by mothy View Post
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      Pollsters have got 2 out of 2 wrong so far - so maybe they will make it a hat trick & Italy will accept the changes their pm wants
      The pollsters got the UK election very wrong, were split on Brexit (for the last polls, two called it for Leave, one for Remain and one a dead heat ... but all within margin of error) and were out on the US election (but again, generally within margin of error) - the pollsters haven't done too badly - UK aside.

      This isn't really a Brexit moment though as the referendum has no effect on EU membership, a survey in the summer suggested the majority wanted to stay in the EU, while a survey last week suggested that two-thirds of Italians thought decision about membership should be left to the politicians ... and we know which way they'll go
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      Quote Originally Posted by ManOfSussex View Post
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      All happening on Sunday as it's the re-run of the Austrian Presidential election on December the 4th too. The far-right Norbert Hoffer is the favourite to win.
      A far right Austrian taking power? I don't see what could possibly go wrong with that.
      People like Coldplay and voted for the Nazis. You can't trust people.
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      Members Green Cross Code Man's Avatar
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      Quote Originally Posted by Gwylan View Post
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      This isn't really a Brexit moment though as the referendum has no effect on EU membership, a survey in the summer suggested the majority wanted to stay in the EU, while a survey last week suggested that two-thirds of Italians thought decision about membership should be left to the politicians ... and we know which way they'll go
      It could be considered a Brexit moment as voting against the government could possibly undermine the stability of Italy's banks even further. Italy being forced to leave the Euro could well cause the whole project to come crashing down. I would rather that than the Le Pen scenario.
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      Members larus's Avatar
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      Quote Originally Posted by beorhthelm View Post
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      so you're suggesting the polls are wrong again and they will accept the constitutional changes?
      No. I thnk this will be another anti-establishment vote and they'll reject the changes.
    • #10
      Members larus's Avatar
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      Quote Originally Posted by yxee View Post
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      Not so much the 2008 crisis as the current and ongoing eurozone crisis since 2011. Country gets into debt, cannot devalue is way out, cannot bail is banks out, trapped between a rock and a hard place with nothing to do but raise taxes and endure more hardship. That's monetary union without fiscal or political union in practice.
      I agree with you about the EURO structure not being viable, and the solution is not palatable to the nation states (i.e. fiscal transfers from the successful/rich to the failing/poorer countries). However, we aren't out of the financial crisis IMO. The "growth" being achieved is on the back of QE, low interest rates (which are being reduced even though we are supposedly in a growing scenario).

      There are very few counties which are in a good position to withstand the next downturn when it comes. Look at the "taper tantrums" the financial markets have when the Fed threatens to raise interest rates.

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