Italian Lenders Slide on Vote Worries to Drag Down Europe Stocks

Italian Lenders Slide on Vote Worries to Drag Down Europe Stocks

According to a report in the Financial Times, bankers fear that as many as eight of Italy's troubled banks risk failing if Renzi loses Sunday's constitutional referendum.

PhotoItalian Prime Minister Matteo Renzi at a recent conference with Maltese PM Joseph Muscat.

Most other regional stock markets were up, extending last week's gains on bets that Donald Trump's spending plans would boost United States economic growth. But trouble for Italy's banks isn't the start of another financial crisis. "Either we change or I have no role to play", Renzi said this month-a line he regularly repeats at the frenzied round of rallies and media interviews he is undertaking before December 4. "Over the past five decades, we have seen that important and necessary reforms in Italy have been hard to achieve".

Opinion polls now predict Renzi's defeat, in what would be the third big anti-establishment revolt by voters this year in a major Western country, following Britain's unexpected vote to leave the European Union and the USA election of Donald Trump.

Meanwhile, the Five Star Movement, led by the Trump-like, insult throwing comedian Beppe Grillo, has become the main opposition party to Renzi's PD party.

Its abolition has been included in a list of constitutional changes proposed by Renzi alongside shrinking the upper house Senate and bringing power back to Rome from the regions.

Italy is one of few countries where expatriates can be elected to parliament, and Australian voters are represented by MP Marco Fedi.

The student was aware of the keen attention to the referendum's outcome being paid at global level, and of the possible political instability that could follow in case the reform is repelled. It requires a lengthy process of bills to be approved. "We have a bureaucracy and an administrative system which is conceived to block things, starting with the parliamentary system". "It's this time or it will never happen again".

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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. "But if Italians decide to vote "No", well, I'll get the popcorn out, because you'll be seeing the old guard in TV debates for years", he said. He reiterated what he considers the importance of the vote for the future of democracy in Italy, but also noted the impact it will have if he is defeated by "no" voters. But over the years, its army of well-paid officials have produced just 14 draft law plans, all of which were rejected.

In its twice yearly Financial Stability Review, the European Central Bank stated "elevated geopolitical tensions and heightened political uncertainty have the potential to reignite global risk-aversion and to trigger a major confidence shock".

Instead, Open Europe senior policy expert Vincenzo Scarpetta predicts incumbent finance minister and respected technocrat Pier Carlo Padoan could take over.

"The OECD assessed that, in 2016, our national debt will decrease in comparison to 2015. Among young people I know, the vast majority will vote No". "This OECD statement, however, is a fact that shows that the solidity of the country remains intact".

However, a poll published last week by La Stampa newspaper found 71.1 percent of Italians thought leaving the euro would make the economy worse, with just 16.7 percent seeing it as a boon.

First there was Brexit, then Donald Trump.

Should the "No" vote emerge victorious, it would put the pro "Yes" camp, headed by Prime Minister Matteo Renzi himself, in a precarious position.