Brexit Panic: It’s The Italian Banks, Stupid
Donald L. Luskin
Wednesday, June 29, 2016
Italy missed Europe’s bail-out window. Now Renzi is using the crisis to open it again.
Strategic view: 

The post-Brexit crisis could boil down to the simple proposition that it will nudge Europe into recession, and that Europe’s fragile banks – especially Italy’s, which have undergone the least restructuring – will be the epicenter of systemic financial contagion. New EU rules keep Italy from injecting public funds in banks, as Germany, France, Spain and others previously had. Renzi is using the political opportunity of Brexit to argue for an exception, so a €40 billion fund might be announced as soon as this week. In the EU, decisions are never easy – Juncker appears to be in favor, Merkel opposed. But if it happens, after Spain’s pro-growth election outcome, this would make two-for-two very positive steps taken by Europe following the UK referendum.