Is a 1998 number one hit single for rockers Bon Jovi, taken from the album New Jersey.
Most Malaysians, would rather know what's happening in NEW JERSEY, than in ITALY, or even what's happening to the ITALIAN REFERENDUM taking place TODAY.
Do that, at your own risk, because if the Italians VOTE NO , it could trigger, a perfect storm, UNLEASHING as much as US$400 BILLION worth of BAD DEBTS.
VOX.com has the story most people are ignoring :
Unlike Britain’s vote earlier this year, Sunday’s vote in Italy isn’t explicitly about EU membership. On paper, a “no” vote will just mean that Italy’s constitution will stay the way it is.
But the follow-on effects of a “no” vote could have huge implications for Italian banks, the Italian economy, and perhaps the survival of the euro.
Italian banks are facing a problem that’s broadly similar to the problem some American banks faced in 2008. They made a lot of loans — around $400 billion worth, by some estimates — to people who aren’t paying them back
Italian Prime Minister Renzi is worried that this behavior will lead to a collapse of several major Italian banks, which could trigger a broader financial crisis.
So over the last year he has sought to organize a government bailout, injecting $45 billion into the banks to provide the cushion they need to ride out a wave of loan defaults.
This is the kind of bailout that the United States and many other countries orchestrated in the recent past, but Renzi has a problem doing it for Italy: post-crisis EU rules prohibit governments from doing this kind of no-strings-attached bailout.
Under European law, a bank’s own creditors — investors in the banks’ bonds — must take losses before the government can spend taxpayer money shoring up the bank's finances.
That’s exactly what critics of America’s TARP bailouts wanted to happen in 2008. They said it wasn’t fair to make taxpayers pay billions of dollars to bail out a bank while people who made loans to risky banks get 100 cents on the dollar.
They also argued that making creditors pay before taxpayers would create an incentive to do due diligence on a bank’s finances before lending it money.
They thought making creditors pay would make them more wary of lending to banks making reckless investments. That, in turn, would force banks to be more prudent, making future crises less likely.
This argument assumes that a bank’s creditors are wealthy, sophisticated financial institutions that understand the risks they’re taking on. But in Italy, that assumption doesn’t necessarily hold.
According to Bloomberg, 45 percent of Italian bank debt is held by ordinary Italians. That means complying with the EU rules could mean some Italians lose a big chunk of their life savings.
Renzi got a taste of the potential backlash a year ago, when the Italian government rescued four banks in accordance with EU rules.
Creditors took losses in the process, and one of them was an Italian man who lost $110,000 he had invested in bonds issued by one of the bailed-out banks. The man killed himself, leaving a suicide note criticizing his bank.
Renzi is understandably reluctant to repeat this experiment on a broader scale. So he spent a lot of time earlier this year lobbying EU leaders for an exemption from the EU’s anti-bailout rules that would allow him to inject cash directly into Italian banks.
But European leaders were unconvinced. German Chancellor Angela Merkel, the most powerful EU leader, refused to budge, insisting that it would set a bad precedent to relax the EU’s anti-bailout rules just two years after they were overhauled in 2014.
So Italian banks have been trying to shore up their balance sheets without much help from the Italian government. One key Italian bank, Banca Monte dei Paschi di Siena, has made plans to sell €5 billion ($5.3 billion) worth of new shares shortly after Sunday’s vote.
That’s a figure that’s several times as large as the bank’s current market capitalization. With more cash on hand, the bank will be able to unload €28 billion ($30 billion) worth of bad loans — likely at a discount to reflect their uncertain repayment prospects — to give investors more confidence about its balance sheet.
But investors could get spooked by a “no” vote in the constitutional referendum on Sunday, making it difficult for the bank to raise the funds it needs.
