I realized I have no right to sneer at the myopic decision of Brexit: looking at the latest polls, Italy could have a Five Star + Northern League government, say early 2018.
Then on October 31st, 2019 mr. Draghi’s mandate at the ECB expires to be followed (presumably) by a German Governor, unlikely to continue with the easy money policy, also because the EU economy has picked up some strength in the meanwhile and inflation may be approaching the 2% target. Net result: Italy’s interest expense shoots up by tens of billions.
The new Italian Government is now seriously (ha!) discussing leaving the EU and/or the Euro: imagine Brexit only a thousand time worse: no concrete planning, haphazard monetary policies and abysmal negotiation skills further undermined by a position that’s a thousand time worse than Britain’s but wrapped in the same bombastic populism to whip domestic support casting Europe and immigrants as The Enemy.
The military ineptitude of our Country is about the only silver lining, as it guarantees we can’t ignite the Third World War, but corporates (and the individuals who can, typically the better-educated, language-speaking group) won’t wait for this and will flee the country in droves, taking trillions of capital with them.
In a weird twist, the only capital for investment will be the Government’s making a right wing Government behave like a replica of the worst South American socialism: company after company, bank after bank will be nationalized making larger and larger swaths of the economy subject to political power, corruption and shenanigans.
Economy wizards who got their degree on YouTube resort to sky high inflation to wear off the crushing debt (maybe even theorizing the possibility of a “controlled default”)and to aggressive devaluation to bolster exports, hugely depressing the value of anything not Euro-denominated: despite the nationalization efforts, prepare for an asset liquidation on a scale never seen in history, Greece will be a petty yard sale by comparison.