Referendum Rejected, Renzi Resigns

[MadImmortalMan]

Alliteration Achieved.

Italian Prime Minister Matteo Renzi has announced his intention to resign after suffering what looks set to be a humiliating defeat in a referendum over his plan to reform the constitution, throwing the country and the euro zone into confusion.

According to early official projections, a sizable majority of voters have rejected the reform measures proposed by Renzi,


Italian Prime Minister Matteo Renzi gestures as he delivers a speech during a press conference at Palazzo Chigi in Rome on November 28, 2016.
Andreas Solaro | AFP | Getty Images
Italian Prime Minister Matteo Renzi gestures as he delivers a speech during a press conference at Palazzo Chigi in Rome on November 28, 2016.

What was originally a rather dry referendum on constitutional change has turned into a high-stakes game with the political and economic stability of Italy—and ultimately the euro zone—at risk.

Sunday's vote was on whether the country's second chamber should be stripped of some of its powers. The country's government is hamstrung by procedure and delays to legislation. A "Yes" vote in the referendum would have meant that laws would only need the approval of the lower house to be passed.

Prime Minister Matteo Renzi had pinned his political future on the vote, saying he would resign if a "Yes" vote is rejected.

Populist parties such as the 5-Star Movement had campaigned for a "No" vote, saying the change to the constitution would lead to a concentration of power.

As well as throwing the political future of Italy into doubt, a "No" could hit the country's already-fragile economy hard.

In the minutes following the announcement of the exit poll, the euro fell below 1.06 to the dollar, to 1.058.

If early projections are correct and the final outcome of the referendum is "No" then Barclays analysts forecast last week that after Renzi's resignation, the voting system would be modified in order to avoid a hung parliament, early elections would be called in the second or third quarter of 2017.

However, Megan Greene, chief economist at Manulife Asset Management, told CNBC last week that she believed that the referendum in Italy could provoke another banking crisis in Europe.

Italy's stricken banks are holding nearly a third of the 990 billion euros (or more than $1 trillion) of unpaid loans at top euro zone lenders, according to the European Central Bank data.

The 14 large Italian banks sit on 286 billion euros (more than $300 billion) of bad loans, debt securities and off-balance sheet items. That corresponds to more than one in every 10 Italian loans. The Italian banking sector has already been performing badly this year, down some 48 percent on the start of 2016.

The high levels of toxic loans are a throwback to the euro zone's financial crisis, and what's worse is that they are stopping the banks from lending more, which could kick-start the Italian economy.

The market's fear is that a "No" vote would stymie any attempts to restructure the country's banking system as the cost of financing the rescue through issuing bonds could prove prohibitive for the Italian government. This instability and uncertainty could spread to the rest of the euro zone economy.

"In my view the biggest risk is actually for the banking sector, even more so than political risk, and there will be some political instability," Greene told CNBC on Tuesday.

[Razgovory]

I should take up smoking.

[mongers]

Damn, and I thought the march of the right had been checked by the Austrian pres.election result.

Guess it's a case of one step backwards and two very high steps forward. 

[Grallon]

 


https://www.youtube.com/watch?v=Bkm2Vfj42FY&t=3868s



G.

[mongers]

Not earth shattering news, but another leader has just resigned

AFP news agency
@AFP    24m
#UPDATE New Zealand Prime Minister John Key cites family reasons for his shock resignation u.afp.com/4UHC

[Monoriu]

Not earth shattering news, but another leader has just resigned

AFP news agency
@AFP    24m
#UPDATE New Zealand Prime Minister John Key cites family reasons for his shock resignation u.afp.com/4UHC

I remember a really strange story about him.  He seems to have...pulled the pony tail of a female restaurant waitress repeatedly.  Something I may expect from a little kid.  But the Prime Minister of New Zealand doing that?  It is just...

[Admiral Yi]

Damn, and I thought the march of the right had been checked by the Austrian pres.election result.

Guess it's a case of one step backwards and two very high steps forward. 

What does this have to do with the march of the right?

[DontSayBanana]

Anybody have a nice pros and cons breakdown of this?  My Italian civics knowledge is lacking to the point that I don't know whether this is good or bad news...

[Grinning_Colossus]

Is the 5 Star Movement really right wing? I thought it was more of a movement for people who are angry about something but don't know what it is.

[Phillip V]

Not earth shattering news, but another leader has just resigned

AFP news agency
@AFP    24m
#UPDATE New Zealand Prime Minister John Key cites family reasons for his shock resignation u.afp.com/4UHC

I remember a really strange story about him.  He seems to have...pulled the pony tail of a female restaurant waitress repeatedly.  Something I may expect from a little kid.  But the Prime Minister of New Zealand doing that?  It is just...

Sad!  GRAB THEM BY THE PUSSY.

[MadImmortalMan]

Is the 5 Star Movement really right wing? I thought it was more of a movement for people who are angry about something but don't know what it is.

My understanding is that their main platform consists of getting Italy out of the Euro and back on the lira. The only thing they have promised that I know of is a referendum on and beginning the process of accomplishing that one thing.

[Richard Hakluyt]

Populist is a better description than right-wing I think. Many of these movements seem to be on the left as regards economic policy. Not that it matters, at the extreme ends the left and right start to resemble each other more than the centre.

[Josquius]

And the far right idiots are gloating about this despite it being nothing to do with the eu.
The Austrian vote meanwhile? Oh.... look at how many voted for our side ! We still won!

Populist is a better description than right-wing I think. Many of these movements seem to be on the left as regards economic policy. Not that it matters, at the extreme ends the left and right start to resemble each other more than the centre.

Economics are a secondary factor for deciding right and left. Afterall on economics even the nazis could be said to be somewhat left despite being the poster boys of the far right.

No idea what these Italian populists are though. Maybe they are different to ukip.

[Richard Hakluyt]

I think they are pretty different to UKIP.

Apart from anything else the breakdown of the vote by age follows a totally different profile :

https://www.theguardian.com/world/live/2016/dec/04/italian-referendum-and-austrian-presidential-election-live

[celedhring]

I'm certainly no expert on Italian politics, but it looks to me like Renzi overplayed his hand. I'm far from being an anti-establishment extremist and I would have had lots of trouble voting "yes" for that reform. Actually, most likely I'd have voted "no".