Italy split right down the middle


It is kind of telling that the furthest province in the north (Bolzano/Bozen) had the highest  YES vote (63.69%) in the country while the Province of Catania (south-east Sicily) had the highest NO vote at 74.56%. Bolzano/Bozen was diligent with a 67.41% turnout vs 57.41% in Catania. It is a rich/poor divide by the looks of things. If you wish to dig into the details look no further than this site for who voted how.

As I reported in my visit to Italy in September on my personal on-the-ground experience of how bad Italy had become.

“Unfortunately at the hotel I’m at (near the track) seems borderline bankrupt. It’s 31 degrees outside but the hotel says it won’t turn on the aircon because it isn’t in their view hot enough. I said so “what your customers feel is irrelevant then?” Now I’m not staying at the Ritz and I didn’t have any high expectation but so tight is this 3-star hotel, that table cloths from the night before are stained with red wine and the condition of the hotel is in a state of disrepair. Renovators delight might be a good way to think of it. They also requested full payment up front so tight is the cash flow. Note the Province of Rimini (where this place is) was 53.29% NO. If we used this as a benchmark weight for economic struggle then how much worse are the provinces to the south

Just like my post from Florence, one of the boutique stores made it very clear business was terrible and the 50% off sales are ongoing way beyond the usual sales period because people are tapped out. With banks carrying 20% non performing loans, businesses struggling and the referendum postponed again even Italy’s anti-EU 5-star Movement now finds itself embroiled in scandal meaning the anti-establishment party doesn’t offer Italians a real alternative to the malaise they’re in.” Same thing for Florence. Florence actually voted YES 57.71% with 78% turnout. Florence is a huge tourist trap yet the sales are probably ongoing.

Italy is the 3rd largest economy in Europe and 30% of corporate debt is held by SMEs who can’t even make enough money to repay the interest. The banks have been slow to write off loans on the basis it will eat up the banks’ dwindling capital. It feels so zombie lending a la Japan in the early 1990s but on an even worse scale.

Monte Dei Paschi De Siena, a bank steeped in 540 years of history has 31% NPLs and its shares are 99.9% below the peak in 2007. Even Portugal and Spain have lower levels of NPLs. The IMF suggested that in southern parts of Italy NPLs for corporates is closer to 50%!


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