What the fuck is going on here?

>>2022370
I don't thing italy CAN actually leave EU at this point..

>>2022467
EU is falling apart as we speak, it has lost it's credibility in the eye of the masses. I don't believe in any dramatic HABBENING!1! but a steady decline has already started and eventually leads to some other union than what we have now

>>2022467
>>2022501
Honestly I'd say that an Italian banking crisis would probably be a huge boon for the Eurocrats. Think about it: the only remedy for the Italian banking sector would probably be something along the lines of TARP in 2008. Considering what happens previously in 08-09, this would probably trigger an Italian sovereign debt crisis or at least a downgrade of Italian sovereign debt to junk status (which means the ECB can't buy it unless it gets waiver like it does with Greek debt).

So either way Italy triggers a crisis. Either the Italian banks will start it or an Italian sovereign debt crisis will. No matter the cause, the contagion will quickly spread throughout Europe. The first ones to go will be the banks with direct exposure either through shares or bonds to either Italian banks or the Italian government. Once those banks go under, the banks with exposure to those now-bankrupt banks start to have moderate financial difficulty at best. At this point, we start seeing sizable declines in the stock market at the very least equal to those seen under moderate recessions.

The real wave hits once enough banks fall down that other states have to intervene. You're going to see a wave of sovereign debt crises hit Europe as Portugal, Ireland, Greece, Spain, and perhaps even France spend to try and save their banks. The few countries left standing will probably be Northern European ones, perhaps even Germany alone. The German taxpayers will have a shitty environment considering how much of an impact this would have on Frankfurt and Deutsche Bank, which would probably need federal aid. The collapse of the EU also has negative implications for the German manufacturing sector, which could prolong a recession. So what would the German government do?

Naturally, it'd establish a dialogue with the other EU states and start taking steps towards federalizing the EU. Germany bails out the other countries, but now gets a direct say in how money gets spent. Cont.

>>2022733
cont.

Under normal circumstances, allowing Germans and European bureaucrats to decide how public budgets get spent would trigger a wave of populist backlash and it very well might in that situation, but under the guise of ending the financial crisis virtually any strategies are acceptable to stop the bleeding.

Germany isn't a never-ending pit of money either. Already, Germans have begun to feel the brunt of having to bail out other European states despite the trade gains they get from the EU's free trade regime. In this situation, the Germans could very well stand on the brink of a sovereign debt crisis themselves. So what happens at that point?

This is when you see the true creation of a European federal state. The European Central Bank, to raise funds for these emergency measures, is now allowed to issue Eurobonds: European government bonds. European Parliament most likely will receive emergency powers to direct state budgets or receive funds from bond sales to intervene with European, not Greek or Portuguese or Spanish, bailouts of financial institutions. Presumably a Basel 4 gets passed once things have teetered away from the apocalypse (assuming this all works) and you have a European federal state. The federal state initiates fiscal stimulus programs to drive down unemployment once the banking crisis stops and is heralded as the savior of the Europe, seen in the same light as FDR during the Great Depression. At that point, the United States of Europe are established, fiscal stimulus is used to mitigate the obvious economic issues stemming from a flawed currency union, and the common defense and security policy is made state-code.

>>2022751
>>2022733
>implying people will accept this

It won't happen. A federal Europe won't exist. I understand your saying they'll use the crisis to force one, but there be riots and populism before that happens. They'll never trust the people who created the problem through the EU to be the ones to solve it

>>2022789
I admit I may just be being paranoid, but I think that the ECB issuing Eurobonds is within the boundary of possibilities.

Bailing out all of Europe on a much more massive scale than '09-'10 during the sovereign debt crisis would really be a strain on Germany's finances outside a federalized EU structure though. Having Germany bail everyone out would be catastrophic, but letting every country in Europe melt down would have a catastrophic effect that would easily send the rest of the globe into recession. The IMF would be hard-strapped for funds in that situation and the United States could face another round of bailouts or easy monetary policy (rate cuts/bond purchases) to support itself.

>>2022813
Germany is the next Japan. Their demographics are terrible and Muslim immigrants are like cane toads brought in to address cane beetles. Europe is fucked. Let's see what happens.