Financial Times Worries of ‘Panic’ if Renzi Referendum Fails in Italy; Economist Says To Vote ‘No’
Nov. 28, 2016 (EIRNS)—Not only could "up to eight of Italy’s troubled banks risk failing if Prime Minister Matteo Renzi loses a constitutional referendum next weekend," says this morning’s Financial Times, but, "a mass failure of Italian banks could trigger panic across the Eurozone banking system."
In her review of the situation, Rachael Sanderson quickly skips over the "four small banks" needing a bail-out, along with the three mid-sized banks also on the block, and comes right to the big one, Monte dei Paschi di Siena (MPS). Even with JPMorgan leading the bail-out, she admits, the "complex €5 billion recapitalization and bad-debt restructuring" plan might not be enough, and a "worst case scenario ... would translate into a wider failure of confidence in Italy and imperil a market solution for its ailing banks."
In reviewing the FT article today, Zero Hedge’s Tyler Durden includes graphics which include the scenario of Renzi’s likely resignation, should the referendum fail. He notes that, while Sanderson is worried about the "bail out," a "bail in" would be
"the equivalent of political suicide: the vast majority of bail-inable Italian debt is held domestically, read, savers and pensioners. Should they be impaired, it would lead to an overnight social crisis."
Despite (or perhaps, because of?) all this panic-talk, Durden notes that the Economist has advised a "No" vote. For Durden, however, this is good news: "The Economist, the once reputable economic and financial publication half-owned by the Rothschilds, has had a terrible track record of advising its declining readers on how to vote in critical political events: from urging a ‘Bremain’ vote this past June [to remain in the EU], to begging for a vote for Hillary on Nov. 8, the Economist has gotten virtually every major political event wrong."