A Prime Minister a Referendum and Italy’s turn to get worried

kika3131191_matteo-renzi

http://www.bloomberg.com/news/articles/2016-07-04/a-prime-minister-a-referendum-and-italy-s-turn-to-get-worried

It’s now a familiar refrain: A European prime minister calls a referendum, his job could be on the line and markets are getting worried.

This time it’s not Britain’s David Cameron but Italy’s Matteo Renzi, who has called a vote on an ambitious overhaul of the political system aimed at ending the country’s unstable governments. If he loses, Renzi has promised to quit, an outcome that Citigroup Inc. called probably the biggest risk in European politics this year outside the U.K.

The vote is expected in October, though it is already spooking investors and Italian bonds are once more under-performing their Spanish peers. The yield on 10-year Italian securities overtook those on similar-maturity Spanish debt for the first time in almost a year on June 27, a day after Spain’s Acting Prime Minister Mariano Rajoy defied opinion polls to consolidate his position in a general election.

“A negative outcome would herald a new phase of extremely high political uncertainty, with a notable absence of major centrist leaders and a rising risk of populist movements taking hold,” said Marco Protopapa, economist at JPMorgan Chase & Co. in London.

At 1.25 percent, yields on Italy’s 10-year benchmark bonds were nine basis points higher than Spain’s on Monday after the spread widened to 11 points on June 29.

Italians will vote on Renzi’s proposal to reduce the number of senators to 100 from 315 and limit the upper chamber’s power to bring down governments. Meanwhile, the anti-establishment Five Star Movement is poised to profit from a defeat. An opinion poll by the Demos institute showed last week that Five Star has overtaken Renzi’s Democratic Party to become the country’s most popular group. Five Star wants to hold a referendum on Italian membership of the euro.

“Any outcome of the referendum that is seen as destabilizing the status quo could add to the headwinds for the Italian economy and the euro,” said Valentin Marinov, a strategist at Credit Agricole SA in London.

Renzi, 41, is already facing an uphill battle to put the economy on a sound footing. The International Monetary Fund predicts gross domestic product will expand only 1.1 percent this year, trailing most other euro-area economies. Italian unemployment in May was stuck at 11.5 percent, well above the 10.1 percent average for the 19-nation region as a whole.

***

Italian ‘zombie’ banks put EU financial system at risk

https://www.rt.com/business/349690-italy-banks-crisis-eu/

Experts are warning the banking crisis in Italy may spread to Europe as the rules restricting state aid to major banks need to be reviewed.

We adopted rules on public money; these rules must be assessed in a market that has a potential crisis to decide whether some suspension needs to be applied,” Societe Generale Chairman Lorenzo Bini Smaghi told Bloomberg, adding that the whole banking market was currently under pressure.

According to new EU regulations, taxpayers’ money cannot be used to support failed banks. If Italy follows this rule, several national lenders may go bankrupt, leading to huge losses for depositors.

Last week, the European Commission allowed Italy to inject €150 billion to maintain liquidity with the government considering an extra €40 billion to support the banking sector.

Italian banks are burdened by about €360 billion ($389 billion) of soured loans, about a quarter of the country’s GDP.

Italian authorities are expected to invoke a European rule letting the country free up temporary state aid if regulatory stress tests reveal a shortfall at Banca Monte dei Paschi di Siena – the third largest lender, according to unnamed source quoted by Bloomberg.

———

this the next spot fire..italy..

“Experts are warning the banking crisis in Italy may spread to Europe as the rules restricting state aid to major banks need to be reviewed.”

yep..

“Italians will vote on Renzi’s proposal to reduce the number of senators to 100 from 315 and limit the upper chamber’s power to bring down governments. Meanwhile, the anti-establishment Five Star Movement is poised to profit from a defeat. An opinion poll by the Demos institute showed last week that Five Star has overtaken Renzi’s Democratic Party to become the country’s most popular group. Five Star wants to hold a referendum on Italian membership of the euro.”

five star eh?..watch this space..

401

~ by seeker401 on July 12, 2016.

4 Responses to “A Prime Minister a Referendum and Italy’s turn to get worried”

  1. IMF Warns Of “Global Contagion” From Italy’s Bank Crisis; Forecasts Two-Decade Long Recession

    http://www.zerohedge.com/news/2016-07-11/imf-warns-global-contagion-italian-bank-crisis-forecasts-two-decade-long-recession

  2. MatteoMatteo needed training to do that hand-sign

  3. yup Mateo does like with each finger is a skill there haha

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