The ticking time bomb at the heart of the EU is Italy.
Yes, Italy has the potential in the near future to explode and make 2008 look like the warm up act.
Brexit? Doesn’t even come close! And here’s why-
Italy’s debt is interwoven into the world’s financial system. Everyone’s got Italian debt-the US, UK, Germany, and just about every major economic power. The trouble is, Italy is stuffed full of toxic/zombie non performing debt and bank lending.
It has $2 trillion in outstanding debt, and its economy is flat-lining. Living standards are below where they were 10 years ago, and youth unemployment is at 30%. The Italian government owes 35,000 Euros per person. With government debt at 132% of GDP, and GDP growing at 1%, there is only one conceivable outcome.
Default and bankruptcy.
To put things into context, Italy has a problem the size of Greece in 2012, and the US sub-prime mortgage collapse in 2007.
So, if the seemingly inevitable happens, and Italy defaults, it could trigger THE BIGGEST FINANCIAL CRISIS IN HISTORY!
So what would this mean for us mere mortals? Well, if (or when) it happens, you would expect to see-
- Stock-markets implode
- Pension funds savaged
- Property prices fall
…..and possibly the scariest of them all, is that there will either be bank failures, or the people with deposits in banks will be forced to swap their cash for bank shares. Think that would never happen? Well it already has, look what happened to Cyprus and their banks in 2013.
There are no apologies for spreading gloom, the point is to highlight what lies below the surface. And, just to compound the potential for a financial meltdown, we have another issue to discuss………it’s called T2. Sounds like an old Soviet tank, but it’s not. It’s a barometer of what is going with the Euro banks.
And it ain’t pretty.
Watch this space….!!