Courtesy of Mish.
The nannycrats in Brussels better be working on plan B. Plan A, never let a country leave the Eurozone, is set to fail, sooner or later, and in a country big enough to have massive repercussions.
On December 4, Italy holds a referendum that would give sweeping powers to the winner of an election. If the referendum fails, prime minister Matteo Renzi has repeatedly threatened to resign.
On December 5, it is increasingly likely that Europe could wake up to an immediate threat of disintegration.
Financial Times writer Wolfgang Münchau says Italy’s Referendum Holds the Key to the Future of the Euro.
Münchau: After Brexit and Donald Trump, prepare for the return of the eurozone crisis. If Matteo Renzi, Italian prime minister, loses his constitutional referendum on December 4, I would expect a sequence of events that would raise questions of Italy’s participation in the eurozone.
Mish: Questions about Italy’s participation in the eurozone do not go away if the referendum holds. Questions last at least until the next election.
Münchau: The underlying causes of this extremely disturbing possibility have nothing to do with the referendum itself. The most important was Italy’s economic performance since it adopted the euro in 1999. Total factor productivity, the portion of economic output not explained by labour and capital, has fallen in Italy by about 5 per cent since then whereas in Germany and France it went up by about 10 per cent.
