Italy Openly Discusses Euro Exit In Parliament: Debt Restructuring Or "Italeave" On The Way?

Tyler Durden's picture

Authored by Mike Shedlock via,

In Europe, where it is essentially taboo to publicly discuss anything deemed politically incorrect, some interesting conversations are taking place in the Italian parliament regarding the future of Italy in the eurozone.

Via email, Eurointelligence asks Is Italy heading for debt restructuring or euro exit?

We are reporting from an important conference in Rome yesterday that has caught the Italian news headlines this morning – on the future of Italian public debt. It was organized by the Five Star Movement, held in the Italian chamber of deputies, and openly discussed issues such default mechanism inside the eurozone, sovereign debt restructuring mechanisms, parallel payment systems, and of course euro exit.


What is important about this debate is that it is now taking place in public – you can’t be more public than inside the parliament. Italians, not only the Five Star Movement, are openly talking about these issues.


One of us was on the podium, where we reiterated our criticism of the Five Star Movement’s previous-held cavalier notion of a euro referendum. The essential point we were trying to make in the debate, well reflected in this morning’s coverage by the main newspapers, is that euro exit is not a decision to be taken lightly. The announcement of a referendum would produce a financial crisis and might turn into a self-fulfilling prophecy. Euro exit belongs to the category of things that, citing Shakespeare’s Macbeth, “if it were done when ‘tis done, then ‘twere well It were done quickly“.


What struck us about this event was the sheer political leverage. Luigi di Maio, the presumptive Five Star candidate for the job of prime minister, seemed to distance himself from supporting euro exit. He sat through the entire 12-hour marathon of discussions. Beppe Grillo and Davide Casaleggio made short appearances. It was very clear that the Five Star Movement is now aggressively tackling the topic of Italy’s future in the eurozone, which is likely to become a major election issue. It also raises questions, as some Italian commentators did this morning, about possible coalition choices for the party if it adopts a more nuanced position on the euro.


A lot of space was given to a discussion on fiscal money – coupons issued by the state to people for use in tax payments. We recall that Yanis Varoufakis worked on a similar scheme for Greece, and one of his advisers at the time gave some details of how such a scheme can be made to work and why it did not work in Greece. The answer is that it requires an extraordinary degree of technical and logistical preparation that is outside the scope of what most governments are physically capable of.


Conferences such as these never reach consensus, but they bring up questions. One of the questions on fiscal money is whether it is sustainable or merely transitional. Is it just an instrument through which a country transitions to a new currency, or just a short-term liquidity measure, or can it work as a supplemental form of money?


Another discussion that struck us was a paper by Alberto Bagnai and Brigitte Granville, who did a stochastic simulation of the costs of euro exit. They noted that there would be an initial cost but that strong counter-cyclical growth would soon resume. The problem with this simulation is that it does not take sufficiently into account the multiple financial shocks that are likely to be dominant during such a phase. Euro exit would do major damage to the financial system both of Italy and the eurozone. The authors have a variable that includes a banking crisis, but we do not think this does justice to the financial Armageddon we are likely to see after an Italian euro exit.


And finally, we noted a comment by Heiner Flassbeck, formerly at the German finance ministry and Unctad, who noted that there can be no solution to the eurozone’s persistent crisis unless one insists on symmetric adjustment in the eurozone. He advocates the strategy that Italy should make a credible threat to leave the eurozone in order to force a German policy shift.

Path Towards Italeave

I have noted before that all of Italy’s major political parties with the exception of Matteo Renzi’s Democratic Party have flirted with or actively support leaving the Euro.

The path to Italeave is a difficult one, requiring a referendum and a constitutional change, but trouble is brewing on a huge number of fronts simultaneously:

  1. The Italian banking system is insolvent
  2. Another refugee crisis is brewing (this time via boats from Libya)
  3. Italy’s youth unemployment is a whopping 37%
  4. The ECB is the buyer of only resort for Italian bonds
  5. Italy’s debt to GDP ratio is over 130% to the consternation of Eurozone officials
  6. The global recovery is extremely long in the tooth
  7. Italy made no progress during the recovery
  8. The topic of Italeave is no longer taboo

Any number of things could start a chain reaction making Italeave look good to a majority of Italian voters.

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Cognitive Dissonance's picture

Then whose markets would Germany exploit?

VinceFostersGhost's picture



Screw the 4th Reich!!!


We'll offer to do the D-day thing one more time.......then that's it.

Ghordius's picture

correct, Italians and Russians always went very well, together

even while Italians were part of the invasion force in the Soviet Union, note. lots of Italian soldiers found a Russian wife, there

there is also a city named after an Italian, in Russia:

after this Italian: , a communist that helped the SU to get some car-making technology

further, when the EU choose an Italian as it's new "foreign minister", in the Kremlin they were uncorking champagne

it has always been a huge headache for Washington, that friendship

07564111's picture

Fuck the USA ;)

We Russians seem to be making some 'new' 'old' friends :D :D

Ghordius's picture

refreshing, to see someone here openly identifying himself as Russian

note that tomorrow the US head of government is going to Warsaw

the US admin wants to sell Liquefied NatGas to Poland. it involves huge investments for something that is way cheaper by pipeline... from Russia

reason: the planned pipeline between Russia and Germany, directly, under the Baltic Sea

now, isn't that refreshing, too? Russian-German interests... squared against US-Polish interests?

sanctions, you say? well, last time, before the G7, the US and the UK asked for more sanctions against Russia

France, Italy and German produced a choir of "NON, NO, NEIN"

now, the US Congress is thinking about sanctions... against the German and Russian companies involved in the pipeline

more of that "new" / "old" friendships coming and going, possibly

ramon_espino's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

wildbad's picture

generally i think you are right but for the statement that FR, DE and IT all said no to sanctions.

of course the sanctions are self serving and very bad business proportionally for euro countries.

this leads me to believe that super national interests are pushing them, not simply US

BarkingCat's picture

Everytime Germany and Russia align on one side and Poland on the other,  Poland ends up getting fucked in a catastrophic way.

They should give Germany the finger and form a closer relationship with Russia.

If they think that being aligned with the US will save them from disaster,  they have not studied American history. 

They don't even have to study much of it. A quick read the relationship and treaties between say the US government and Cherokee Indians will suffice. 

Or perhaps just review how Roosevelt and Churchill screwed them over after WWII.

TheGardener's picture

While living in Poland for half a year, I wrote an essay called "The aryan as a loser" having the belligerent big mouthed and proud yet

cowardly locals on my mind. I had Poles as friends (pretty good blokes but falling short of wanting to steal horses together) and love Polish woman.

Just another gullible race like the Russian or German bears but a lot more light hearted bordering the irresponsible at heart that they acted out

with foreign help to their demise.


caesium's picture

The Poles can be a pain. Both Pius XI and Paul VI worked there as diplomats when younger. They found it a struggle. The Poles refuse to respect their neighbours.

You are quite right, Roosevelt and Churchill screwed them over.

veritas semper vinces's picture

My dear EUrocrat,wake up.EU just extended the sanctions bc EU is A VASSAL of THE ANglo-American-ZIONIST empire.

I Feel a little Qeasy's picture

'US-Polish interests'. Laughing my ass off.

What you should have written was ' Russian-German interests... squared against US interests?' The interests of the Poles doesn't come into it, AND YOU KNOW IT, Ghormless!

Ghordius's picture

Cog: "Then whose markets would Germany exploit?"

ok, so if both Germany and Italy would go back to gold (not even gold-backed, just straight gold coins)...

... would you still talk about exploitation? if not, how can you if they use the same fiat currency?

(by the way, which US States does the FED exploit? which not?)


you know the real secret of the relationship between Italy and Germany?

Italian private ownership of a lot of German companies, particularly those on the stock markets

every German dreams of a villa in Tuscany, and every Italian dreams of a well-rounded portfolio of German stocks, goes the quip

DocBerg's picture

The Northeastern part of the U.S. exploits the Southern and Midwestern parts, and have since Reconstruction. 

Making Merica Great Again's picture

Merkel has them by the balls. They are bluffing

XAU XAG's picture

"Merkel has them by the balls". They are bluffing


If that were true she would know there is nothing in the sack!


She will not want them to leave for contagion

BarkingCat's picture


Merkel has them by the balls



What balls??

XAU XAG's picture

Italy never recoverd from the 2000 crunch....................because they use the €

SpanishGoop's picture

Watch the EU explode (not implode) if Italy ever gets a debt restructuring.


07564111's picture

That very though occurred to me also..what will the Greeks say ?

VinceFostersGhost's picture



..what will the Greeks say ?


Since you asked....

07564111's picture

It's been a while since I watched that..thank you :D :D

otschelnik's picture

If England is a donor country and has to pay to leave the EU, will Italy as a subsidized country get a cash bonus if they 'vai via?' 

Ghordius's picture

Italy is one of the major net-contributors to all things EU

edit: well, facts are facts, and "junking" does not change that

here, from the Telegraph, which ought to be counted as a valid source, here:

onedb1's picture

A rare ( actually my first ) time ever I agree with Ghordius. Italy a founding member and net contributor, it always has been . Its a fact .
Anyone can check the figures.
I do hope they start the process to exit the EU too. Many are furious with the EU and its certainly not a politically correct country. Italians don't hold back trust me.
The problem is that they need to pass a law first to allow a referendum on such matters first. The whole process is skewed against those who want to Leave. Judging by the current polls and recent elections the percentage of Leavers is higher than 50% .
I will be supporting the EXIT too. Like I did for Brexit. The EU is out of control and does not represent Europe.

veritas semper vinces's picture

I really,really hope Italy will say VAFFANCULO to the disastrous EU which ruined their great country. I love Italy and thei creativity and genious

PrometeyBezkrilov's picture

I am not that sure if one can qualify Britain as a donor.Britain is a center of a parasitic financial empire and can’t be treated as donor. Besides, I am not sure if Britain and US these days produce anything but financial Ponzi schemes and fraud. The recent US fraud that comes to mind is robbery of VW. The recent British fraud is court case against Russia to pay for Yukos.
Nobody gives a shit that Yukos owner was under investigation in Switzerland for financial fraud. Who owns “Cede & Co”?

bentaxle's picture

I thought it was a matter of only having a €20billion fund o bail out banks with total impaired borrowings of €346 billion and declining economic activity. 

PontifexMaximus's picture

And despite all these 8 points, italy is working properly: bankrupt banks are saved, against EU rules, and will be saved, food is finest, spending time on the coast during summer time is marvelous, everything is fine. They will never leave.

Dilluminati's picture

No hell no, cannot leave unless they pay a YUUUGE FINE to the banksters who setup a court for the banksters, by the banksters, where all proceeds go to the BANKSTERS!

No hell no Itally cannot leave, they must bow to the banksters instead and become Greece first.

Memedada's picture

Exactly. The banksters behind Greece was most US-based (Goldman Sachs). Sure, City of London and DB are in on it, but US/EU is a global racket.

Ghordius's picture

Mike "Mish" Shedlock and "EuroIntelligence"

still wishing for the EUR to break up. somehow, whatever

when I joined ZH, I though I could shoot some holes in their argumentation. now I have problems finding that argumentation

yes, the Italian Parliament discusses such. and? you still need a plan of how you want to do that

just look at the Brits and their Brexit: still arguing how, still nowhere, and this with a ticking clock

Italy? well, Italians have a history in things like banking, currencies and government. never try to short them, you need a lot of very hard to get information for such things. evidence: the oldest bank of the world. evidence: how wealthy Italians are, against all expectations

it's like trying to teach your grandmother how to suck eggs

speaking of "grandmother" countries, did Greece exit the EUR? no? how so? consequences? what are those?

and there you have it

the late idi armin's picture

It hasn't broken up yet because the politicians like a european wide stage to prance on.  thats the only reason. The Greek politicians were quite happy to chain their countrymen to a hundred years of debt slavery if they could still be accepted as memebers of the EU; shabby, quietly despised members but members none the less.

caesium's picture

The new American ambassador to Greece has form in the Ukraine. I strongly suspect a color revolution was on its way in the event of Grexit.

Yog Soggoth's picture

Those Italians sure are a patient lot. With 2,451 tons of gold I would have made a new Lira yesterday. They should have shut the port to those refugees a long time ago. Nutty World right now.

steaua's picture

Before EU they were all millionaires as the Lira was worthless and devalued by 20% almost every year. They go out - will have that again.

A colleague of mine moved from Italy to Switzerland in the 80's and was surprized that all his savings in lira got translated into just a few 1000 chf notes

veritas semper vinces's picture

Dear brainwashed Romanian,ALL paper currencies go eventually to their real value= zero.But a few countries have GOLD(Italy is one)

TeaClipper's picture

Beware the jack boot of the Fourth Reich coming your way Italy. 

Ghordius's picture

Italians scared about such a thing?

the First was the Roman Empire

the Second was the HRE, which started with an Italian Pope putting the imperial crown on the King of the Francs, which led to an near endless number of German Kings to repeat that crowning thing in Rome, which was all about keeping them involved in Italian Affairs

the Third... Italy allied itself to that one

the Fourth... features, at the moment, things like Draghi sitting in the tallest building in Frankfurt, among other things, and managing the common currency

that boot? might be an Italian fashion product, what you are talking about

veritas semper vinces's picture

Draghi is Goldman Sachs ,not Italian,in case you have not noticed.


Horse Pizzle's picture

Southern Europe should form a common market with Zimbabwe, Nigeria, and Somalia.  We'll give them Chicago and Puerto Rico.

shizzledizzle's picture

They still have an airforce right? How about striking some "strategic" targets in Brussels. 

Youri Carma's picture

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Feb 3, 2017

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