Is anyone in the UK paying attention to Italy? They are in the US, based on what I heard at Nick Murray’s excellent annual conference.
It would seem that Brexit is a sideshow for them compared with the Italian situation. They see Brexit as basically “done”, the final details being an irrelevance in the grand (the rest of our lives) scheme of things.
Italy is what they are exercised about. Or should that be Quitaly?
But Italy quitting the EU seems really far-fetched. I don’t think it will come to pass, instead the EU will collapse.
How can it not? Italy is probably too big to fail and too big to bail.
Based on the IMF figures for GDP, Italy’s economy is nearly 10 (TEN!) times bigger than Greece and just over 50% the size of Germany’s.
How do you bail that out? Germany definitely can’t do it on its own. And the Germans seemed mightily upset helping out Greece. That means lots of pain for all EU countries. Do they really have the stomach for it?
Look at the time, effort, money and fuss that was made over Greece. Have they really been saved?
In 2008 their economy was the 29th largest. Today it is the 53rd, just ahead of Iraq. But behind – wait for it – Venezuela, Peru, Bangladesh and Colombia to name a few. Some bailout, eh?
I suppose they could just print so much money they inflate the debt away. But it seems unimaginable any German leader would willingly sign up for hyperinflation.
Stopping Italy failing means immense pain for all EU members and they simply won’t be able to stomach it. And that means the end of the EU.
Not that this wasn’t going to come at some point. The EU’s design and set-up makes failure inevitable.
It started out with all the best intentions 60 years ago in a war-ravaged and occupied Europe, cut in half by the communists, with fascists ruling Spain and Portugal and 30% of France voting communist.
It made sense to bring countries together to co-operate rather than be rivals, but we don’t live in that world any more.
Today it’s an unaccountable bureaucracy that, bit by bit, continues to replace national accountability. Powers have been taken from all nation states by this unelected elite and those powers are no longer held to account.
As that local accountability disappears, the citizens are alienated and their belief in the political process undermined further.
An economic area with a single currency and a single interest rate MUST be a single state. That’s what Bismarck understood when he brought the German principalities together. The EU isn’t a single state and won’t be quickly enough to avoid its inevitable fate.
Italy has the starting gun in its hand. At least, that’s how it looks to me…..
N.B. This is all conjecture and hypothesis (at least I like to think so – you might think it’s mad ravings). As such you can’t make any sort of investment policy out of it.
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