Today Italians voted against a basket of proposed changes to the structure of government in a constitutional referendum. Italian Prime Minister Matteo Renzi will resign after the loss after having staked his political career on the results. The same gambit led to the end of British Prime Minister David Cameron’s tenure earlier this year.
Long story short, the trend of populism and nationalism continues to march on. Expect follow through on this trend into 2017 and other elections around the Eurozone. The referendum results have damaged the Euro as doubts are renewed about the future of the political union in Europe and its currency.
The dominoes continue to fall. The defeats for globalism continue to mount. However, in this time of change and upheaval we must be prepared with truth, authenticity, and solutions in order to avoid repeating the mistakes made at various points of tumult and instability throughout history.
The focus from a financial perspective will be on the world’s oldest bank, Italian lender Monte dei Paschi. The latest of many rounds of bailouts and agreements is going to be viewed as being in jeopardy because of the referendum. Nothing in the results themselves are legally binding, but the perception is that the no vote represents a dismissal of the current course of policy in general and that everything – including the bailout of the beleaguered bank – is now in question.
Whether the geopolitical instability actually translates into financial volatility remains to be seen. If it’s business as usual, then the discrepancy between credit and equities will widen and the dip in the euro will give additional phantom strength to the dollar leading to a drop in the paper price of precious metals contracts. The status quo of actual events that create uncertainty and volatility leading to less volatility from the perspective of equities is likely still intact.
For more information, please see the detailed blow-by-blow over at Zero Hedge.