Think Brexit was a sea change? It won’t be close to the referendum in Europe not being talked about

Turn on most business news stations and you will still hear Brexit being talked about, although now it is mostly as an excuse by companies who failed to make their estimated earnings for the last quarter.

But want to hear these paid tools discuss the black swans of Deutsche Bank and the insolvent Italian banks? At best you better tune into the late night European Squawk on the Street to even catch a glimpse of this.

Yet these pale in comparison to an upcoming event that will make even Britain’s exit from the Eurozone little more than a casual summer storm.  And what is this potentially earthshaking event?

The Italian Referendum… which current Italian President Matteo Renzi has staked his entire political career upon.

An important election is coming up, and I’m not talking about the US presidential election. The upcoming referendum in Italy this fall will have a major macroeconomic impact on the world. But hardly anyone outside of Italy is paying much attention to it—yet.

I’ve been saying for some time in interviews around the country that the referendum in Italy could have even more of an impact than the Brexit vote did in the UK. And like the Brexit vote, it is rife with emotion and political turmoil, making the outcome too close to call.

The current prime minister, Matteo Renzi, has basically bet his career on this referendum, which would allow him to enact much-needed reforms. In fact, they’re the same reforms that I have written about in my letters over the past five years and that I talked about in my previous two books.

Italy has about as sclerotic a governmental process as any country in Europe. And that is saying something. There is no end to corruption and crony politics. Each faction wants to keep the status quo and keep its perks but wants everybody else to give theirs up. If you’re a voter in Italy, your frustration is understandable.

This vote in Italy needs to go on your economic radar screen. If the “no” vote wins, Renzi has promised to resign. This would throw Italy into a political crisis. Then there would be a real potential to elect parties that would call for a vote on whether to stay in the European Union. And at this point, it is not clear what the Italians would decide to do.

Know this: The European Monetary Union does not work very well, if at all, without Italy. A “no” vote would be the death knell of the euro.

— Mauldin Economics

For the European Central Bank, Italy has long been a linchpin for its survival, especially since like with Greece, its inclusion into the EU was done using manipulated financial data at the hands of none other than Goldman Sachs.  And it is why following the scandal that threw out the duly elected Italian leader Silvio Berlusconi, the European Commission planted a banker in the office of Prime Minister (Mario Monti), and implemented austerity measures that ensured that Italy would be under the dominion of the ECB for decades.

But like with Britain’s referendum vote, and the rise of political candidates such as Bernie Sanders and Donald Trump in the U.S., and Marine Le Pen and Beppo Grillo in Europe have provided Prime Minister Renzi the cover he needs to trust that the nationalist frequency shift taking place across the globe will be on his side in breaking Italy’s deadlocked parliament, and allow the Italian people to potentially do in finance what the UK did in geo-politics.

One thing is for certain, the crumbling of the European Union is well under way, and should the Italian Referendum succeed as it did North of Gibraltar in Britain earlier this summer, then that end for the EU, as well as the Euro, will come much faster than anyone could anticipate.

8 thoughts on “Think Brexit was a sea change? It won’t be close to the referendum in Europe not being talked about

  1. Ken,
    I just ran across this youtube video – from a Taiwanese Finance TV Channel – the TV guest economist presented her analysis of Fed’s dilemma – to keep both the Property Bubble and the Stock Market bubble alive, Fed had only one tool – to jawbone as they could only allow the USD to fluctuate within 94 to 98 in the USD index.
    Her view is that if the USD goes above 98, it will implode the stock earnings and if it falls below 94, this will implode the property bubble in US. Once the USD goes above or below the range of 94 – 98, the Fed/Yellen will jawbone and try to manipulate the USD back within the 94 – 98 of the USD index.
    She present her conclusions at 13.31 minutes into the video. I have attached the video for you to view; however it is in Mandarin but you can see the table she presented.

    Would you agree with her findings?


    • I very much agree. And I have been following it myself in my currency trading. All I have to do is put my stop losses at the edges of those range, be patient as one bank jawbones the currency one way, then another moves it the other way, and collect my pips.


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