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<blockquote data-quote="bluegreen" data-source="post: 5166530" data-attributes="member: 969"><p>Zero Hedge...……………."Quitaly" <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite7" alt=":p" title="Stick Out Tongue :p" loading="lazy" data-shortname=":p" /></p><p></p><p> In other words, ten years since the Lehman crisis and six years since the euro debt crisis and Italy’s labour cost adjustment has not even begun, and if it does, it is safe to say that Rome faces a political crisis the likes of which it has not seen in a long time.</p><p></p><p>Putting this all together, <strong>the lack of any internal devaluation so far and the unattractiveness of a Greek style PSI leave limited options to Italy to adjust within the monetary union. </strong></p><p></p><p>This, coupled with Italy's massive Target2 imbalance which becomes an instant asset the moment the country decides to exit the Eurozone <em><strong>and never repay it </strong></em>much to the chagrin of Mario Draghi, together with a decent current account surplus - one which would only soar should Italy revert to the lira supercharging the country's exports, which as explained above <strong>reduces the own cost of exiting the euro from a narrow current account adjustment point of view, will likely continue to make the country vulnerable to populist pressures to exit the monetary union. </strong></p><p></p><p>That is the gloomy, if stunning, JPMorgan conclusion, although as a hedge, the bank also notes that the road to Quitaly, as the Greek fiasco in 2015 showed all too clearly, would be anything but easy and neither Brussles nor the ECB would go down without a fight. JPMorgan also notes that the above take also ignores other potential costs from an exit highlighted by the market reaction this week, such as the possibility that it could trigger a broader crisis and, if the Greek script is repeated, capital controls.</p><p></p><p>Then again, if Italy ever got to the point where lines of panicked depositors form outside Italian banks <em>a la </em>Greek summer of 2015, one can wave goodbye to the euro and the European experiment.<img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite24" alt="(y)" title="Thumbs Up (y)" loading="lazy" data-shortname="(y)" /></p></blockquote><p></p>
[QUOTE="bluegreen, post: 5166530, member: 969"] Zero Hedge...……………."Quitaly" :p In other words, ten years since the Lehman crisis and six years since the euro debt crisis and Italy’s labour cost adjustment has not even begun, and if it does, it is safe to say that Rome faces a political crisis the likes of which it has not seen in a long time. Putting this all together, [B]the lack of any internal devaluation so far and the unattractiveness of a Greek style PSI leave limited options to Italy to adjust within the monetary union. [/B] This, coupled with Italy's massive Target2 imbalance which becomes an instant asset the moment the country decides to exit the Eurozone [I][B]and never repay it [/B][/I]much to the chagrin of Mario Draghi, together with a decent current account surplus - one which would only soar should Italy revert to the lira supercharging the country's exports, which as explained above [B]reduces the own cost of exiting the euro from a narrow current account adjustment point of view, will likely continue to make the country vulnerable to populist pressures to exit the monetary union. [/B] That is the gloomy, if stunning, JPMorgan conclusion, although as a hedge, the bank also notes that the road to Quitaly, as the Greek fiasco in 2015 showed all too clearly, would be anything but easy and neither Brussles nor the ECB would go down without a fight. JPMorgan also notes that the above take also ignores other potential costs from an exit highlighted by the market reaction this week, such as the possibility that it could trigger a broader crisis and, if the Greek script is repeated, capital controls. Then again, if Italy ever got to the point where lines of panicked depositors form outside Italian banks [I]a la [/I]Greek summer of 2015, one can wave goodbye to the euro and the European experiment.(y) [/QUOTE]
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