Italian referendum could trigger resignation of Prime Minister Renzi and follow on banking crisis.

This Sunday the Italian people vote on a referendum to restructure the constitution to diminish the power of the regional governments and the Senate and “modernize” Italian governing structures. Mr. Renzi has made victory in the referendum a personal goal and there is worry that should the opposition parties who oppose these changes win then he might resign triggering new elections in which the populist and left parties who oppose bank bailouts will come to power triggering a banking crisis in some already very vulnerable mid size and larger banks. These banks according to the European press and the FT are overextended in bad loans and are suffering from low profits such that their loan liabilities far exceed their equity and asset base. The result could be a cascading crisis that will shake the Euro, the financial markets and require intervention from the ECB. So there is plenty to worry about from Donald Trump withdrawing from NAFTA,to Brexit, to Le Pen and now possibly Italy.Some of the criticism of the constitutional changes being proposed are that it undermines regional autonomy, is antidemocratic because it largely abolishes the influence and powers of the senate and it over centralizes power in the office of the prime minister and it was adopted by the governing party without an effort at building a consensus. Given these criticisms it is by no means certain that the referendum will pass.


About haroldchorneyeconomist

I am Professor of political economy at Concordia university in Montréal, Québec, Canada. I received my B.A.Hons (econ.&poli sci) from the University of Manitoba. I also completed my M.A. degree in economics there. Went on to spend two years at the London School of Economics as a Ph.D. student in economics and then completed my Ph.D. in political economy at the University of Toronto. Was named a John W.Dafoe fellow, a CMHC fellow and a Canada Council fellow. I also was named a Woodrow Wilson fellow in 1968 after completing my first class honours undergraduate degree. Worked as an economist in the area of education, labour economics and as the senior economist with the Manitoba Housing and Renewal Corporation for the Government of Manitoba from 1972 to 1978. I also have worked as an economic consultant for MDT socio-economic consultants and have been consulted on urban planning, health policy, linguistic duality and public sector finance questions by the governments of Manitoba, Saskatchewan,the cities of Regina and Saskatoon, Ontario and the Federal government of Canada. I have also been consulted by senior leaders of the British Labour party, MPs from the Progressive Conservative party, the Liberal party and the New Democrats on economic policy questions. Members of the Government of France under the Presidency of Francois Mitterand discussed my work on public sector deficits. I have also run for elected office at the municipal level. I first began to write about quantitative easing as a useful policy option during the early 1980s.
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