KeNo's Housing and Economic Portal: Thursday December 8 2016 Housing and Economic stories

Wednesday, December 7, 2016

Thursday December 8 2016 Housing and Economic stories

Italians Vote “No,” Renzi to Resign, Banking Crisis Now Looking for Taxpayers - (www.wolfstreet.com) A constitutional-reform referendum on tweaking the way a country governs itself, of the type Italy held today, would normally not be a big deal for banks in that country, and particularly not for banks in other countries, and it wouldn’t have much impact on currencies and credit markets. But these are not normal times for Italy, which is in the middle of a vicious banking crisis, and they’re not normal times for the EU either, which has been grappling with a banking crisis of its own, even as it has begun to splinter, after the Brexit vote. And it still wouldn’t be such a huge deal if Prime Minister Matteo Renzi hadn’t pledged he’d resign in case of a “no” vote.

Greece needs reforms, not debt relief: Germany's Schaeuble - (www.reuters.com) Structural reforms rather than debt relief will help Greece to achieve sustainable growth and stay in the euro zone because rates and repayment are putting hardly any burden on its budget, Gerany's finance minister was quoted as saying on Sunday. Euro zone finance ministers will meet in Brussels on Monday to discuss short-term measures to lighten Greece's debt burden and to assess Athens' progress in reforms required within its third bailout programme. Asked in an interview by Bild am Sonntag newspaper whether it might be time to tell German voters that a debt cut for Greece was inevitable, Finance Minister Wolfgang Schaeuble said: "That would not help Greece." "Athens must finally implement the needed reforms. If Greece wants to stay in the euro, there is no way around it - in fact completely regardless of the debt level," Schaeuble said.

Amid global anti-establishment anger, Italy may be next in line for upheaval - (www.washingtonpost.com) Amid a global wave of anti-establishment anger, Italy may be the next in line for upheaval after a Sunday referendum that could topple Prime Minister Matteo Renzi and cast the nation into political crisis. With Britain quitting the European Union and President-elect Donald Trump headed to the White House, Italy’s anti-immigrant Five Star Movement, led by a caustic comedian-turned-politician, is poised to capitalize on voter anger over a stagnant economy and a surge in migration from North Africa. If Italians reject constitutional reforms championed by Renzi, he has vowed to resign, opening the door to a gust of financial uncertainty that could set off an Italian banking crisis. A defeat for Renzi would also embolden populists across Europe, where elections in France and Germany next year threaten to deliver Euroskeptics as leaders of the bulwarks of European unity.

Deutsche Bank CEO Warns Employees "Europe Is Endangered" After Italy Vote - (www.zerohedge.com) At around the time ECB Governing Council member Ewald Nowotny said that Italy may have to spend taxpayer funds to bail out insolvent banks, warning that "the difference between Italy and other states such as Germany and Austria is that, until now, in Italy there has not been any significant state aid or state takeovers of banks," and that "it therefore cannot be ruled out that it will be necessary for the state to take stakes (in banks) in some way," Deutsche Bank CEO John Cryan sent a letter to employees in which he warned that following the Italian referendum, the economic environment "is a harbinger of renewed turbulence that could spill over from the political arena to the economy – with Europe particular endangered." He also said Deutsche Bank still needed to finish negotiations with the U.S. Department of Justice, which has demanded $14 billion to settle claims the bank missold mortgage-backed securities. Cryan said he could not give details on how talks were progressing.

US corporate bonds: The weight of debt - (www.ft.com) There was no shortage of buyers when Microsoft sold $20bn in bonds this summer to fund its acquisition of LinkedIn. After years of low interest rates — and with rates in some countries heading into negative territory — debt issued by US companies such as Microsoft looked very attractive compared with the meagre returns offered by government bonds. But after Donald Trump’s pledge to push for an aggressive fiscal stimulus of the US economy, these blockbuster corporate debt sales suddenly look like hallmarks of a very different market environment. As investors and markets try to anticipate what a Trump presidency will mean, one early conclusion is that a dose of fiscal shock treatment will result in much higher interest rates and accelerating inflation.

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