Italy’s Boot Was Made for Walkin’ … Away from the EU [Why it matters to Americans]

Italy’s Boot Was Made for Walkin’ … Away from the EU [Why it matters to Americans]

by Daisy Luther

Well, these boots are made for walking, and that’s just what they’ll do
One of these days these boots are gonna walk all over you
You keep lyin’ when you oughta be truthin’
You keep losing when you oughta not bet
You keep samin’ when you oughta be a’changin’
What’s right is right but you ain’t been right yet
These boots are made for walking, and that’s just what they’ll do

Nancy Sinatra

That’s the theme song for the most boot-shaped country in Italy, and to paraphrase Nancy Sinatra, one of these days that boot is going to walk right out of the EU.

The European Union is collapsing. First, the UK voted to leave, and now, Italy is about to head for the exit as well. While this may seem like incidents of little importance to us here in the US, it has the potential to affect us financially, and in a colossal way.

What’s happening in Italy

Italian Prime Minister Matteo Renzi has thrown himself on his sword over the massive NO vote to his proposed reforms.

Italy has been in trouble for some time. Its banking system, the oldest in the world, has extensive exposure to bad and high-risk debt, in part due to incestuous ties with other struggling banks in the EU.

The interconnectedness of the European and global financial system could easily cause an economic plague across the zone, and we, here in the US, have exposure to that contagion.

For the Italian people, the situation is dire. EU rules that were put in place after the last crisis stipulate that taxpayer exposure has to be limited, which sounds good until you understand that it means a “bail-in” will be the solution. Do you recall what happened in Cyprus a few years ago with such a bail-in? The Bank of Cyprus took almost 40% of depositors cash to keep the bank afloat, and there was nothing they could do about it. Assets were frozen and ATM machines were not refilled. (source).

This will be the rockslide that triggers the avalanche, when investors have money removed directly from their accounts to hold up the ailing institutions.

Why it matters to Americans

The problems go far beyond the financial.  If the Eurozone breaks up, then trade deals would have to be negotiated country by country. Payments for running NATO would be in jeopardy. (Keep in mind that Trump has already made noises about pulling our support of NATO, since we’ve been funding 73% of it.)

We may find nations previously politically and financially entwined with the US finding new deals and making new alliances in an effort to survive severe hardships that are heading their way.

Financially, if the EU goes down, they could take the US with them. When it was announced that Deutsche Bank was failing, there were immediate negative effects on our own markets. Now, imagine multiplying that by the 27  remaining members of the EU. The problem with globalism should be fairly obvious. It’s like being in a polygamous marriage with a bunch of people who are bad with money and having their terrible decisions affect you personally.

Back to Italy…

Like other European countries, Italy is struggling with an influx of tens of thousands of migrants that have poured into the country. The economic cost of supporting the migrants is draining the country as they struggle to house and feed them. Massive increases in government spending to deal with them is causing cracks to turn into fissures that may be too wide to heal.

Italy’s economy is 12% smaller than when the financial crisis began in 2008.
The banks remain weak and the country’s debt-to-GDP ratio, at 133%, is second only to Greece’s.
With Mr Renzi gone, and populist parties on the rise, the question is whether Italy can keep a lid on the problems. (source)

Five Star, the right wing opposition party headed up by Beppe Grillo, is hailing Renzi’s departure as a huge step in the right direction for Italy.

After the Brexit vote and Donald Trump’s victory in the US presidential election, the result is likely to be interpreted as another victory for populist forces and a potential stepping stone to the government for Grillo’s Five Star party.

With Euro-skepticism rising across the region, and several countries going to the polls in the first  half of 2017 , it’s very likely that the European Union will look quite different by this time next year.

Also, I know you’ve been humming it ever since you read the headline. So, here you go…


Original article

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Daisy Luther

About the Author

Daisy Luther

Daisy is a coffee-swigging, gun-toting, homeschooling blogger who writes about current events, preparedness, frugality, and the pursuit of liberty on her websites, The Organic Prepper and She is the author of 4 books and the co-founder of Preppers University, where she teaches intensive preparedness courses in a live online classroom setting. You can follow her on Facebook, Pinterest,  and Twitter,.


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