Tourists may be using lire soon.....

No matter which side you're on, it's all so disturbing for the many, many world travelers that love Italy.

If the Euro doesn't survive there, maybe the Lire could start at 1:1. I don't know how many Lire there were in a Euro when the country converted over to the Euro, but it had to be thousands. I remember what it was like prior to the Euro there.

1:1 would be fine with me . Its getting close to that now

David,

According to Wikipedia, L5,000 was equivalent to about €2.58.

That sounds about right. I remember calculating a drink price of L5000 by lopping of the last 3 zeros and dividing by 2 for my guesstimations.

Italy is not going to drop the Euro yet. As far as I know, this has only been proposed by one party, the 5 Star Movement, and their proposal requires another referendum. The current referendum was proposed 2 years ago, so the next one will also take some time, if Italy's various political parties can actually agree to hold it.

Renzi's defeat in the constitutional referendum doesn't mean he's out.

Obviously he will tend his resignation, as he promised in case of defeat, however the President of the Republic (Sergio Mattarella) is not obliged to accept it. As a matter of fact, I am 1000% sure he will reject it and appoint again Renzi to form a new Government. The composition of Parliament hasn't changed because of the referendum, and he will still hold the majority. Nobody in his coalition, least of all the Dems in his own party, wants the dissolution of the current parliament and the calling of new elections. So they will grant him the confidence vote to proceed until the natural end of the 5 year legislature (which expires in April 2018). Between now and the mandatory elections, in April 2018, there is likely going to be a change in the electoral law, and possibly an agreement with the opposition on the constitutional reform of Parliament as well.

I'm not a fan of the Euro, that is the cause of most troubles in the EU economies, because it removed the flexibility granted by the exchange mechanism. The rigidities imposed by the common currency is what cause the current imbalances, with huge balance of payments surpluses by Germany, and near deflation and stagnation for the periphery of the EU. However I doubt that Italy will get out of the Euro for now. Actually there is no mechanism in place to get out of it. The Euro is like the Eagles' Hotel California: you can check out any time you like, but you can never leave. It's basically like for a State to secedefrom the US. It is actually constitutionally impossible.

In case of an Italexit (or Italeave or Quitaly) from the Euro zone (with procedures to be established since they do not exist currently), obviously it would be an exit at parity (1 euro = 1 new lira). Then the markets would take care of adjustments in the exchange rate and maybe a year later you might have 1 euro = 1.20 new lira in case of a 20% devaluation of the new Italian currency. It wouldn't go back to the original lira (which at the time was set approximately at: 1936 Lit = 1 Euro).

Roberto,

That's an interesting assessment. It would seem that things are not always as they seem in Italian politics. I get the impression that Grillo thinks he's going to slide right into the job, although my language skills are not good enough to discern the fine nuances of the conversations. Grillo seems to be forming his cabinet already.

The headlines in Il Giornale read, "La rivincita di Berlusconi. I'm not sure I understand how Berlusconi is involved in this, but if Renzi does stay on until the next election, it doesn't seem like much revenge.

How this is going to play out should be clarified after Renzi's visit to the Quirinale tomorrow.

I do not pretend to know all the subtleties of this, but for the sake of Italian friends in Rome who voted "yes" I was hoping it would pass. The oppressive bureaucracy of the country crushes the life out of everything they attempt to do as law-abiding citizens. It seemed to me that anything at all that would streamline the government would be a great idea.

Grillo can play Prime Minister anyway he likes, but if you don't have the numbers in the parliament, the President is not going to appoint you PM. He's just the cheerleader of a protest movement similar to Occupy Wall Street in America. I know hating the establishment and the institutions is in fashion throughout the Western world, but he's not going to be appointed PM, even if Renzi says his resignation is irrevokable and is not going to accept a second appointment. In that case the President will almost certainly appoint his current Minister of Economy and Finance Professor Padoan,

Il Giornale is owned by Berlusconi, so rest assured that they will find a way to involve him and declare him the victor no matter what. It's the Italian equivalent of FoxNews, but the owner is actually the leader of the party. So it's like having R. Murdoch running for office. I'm sure FoxNews would find a way to promote his agenda.
Renzi's visit to the Quirinale tomorrow is the routine practice. First he goes to tend his resignation. Then the President of the Republic consults with the various party leaders, to explore what kind of majorities are possible in Parliament. Then the President decides who to appoint, based on who he thinks has the most chances to secure a majority in Parliament. If no majorities are feasible, then the President dissolves the Parliament, and calls new elections in advance of the natural expiration (the Parliament lasts 5 years, if it reaches the full term). Since they expect that in the current climate the protest vote would prevail, i.e. the 5 Star Movement (Beppe Grillo) on the left and the Northern League (Matteo Salvini) on the far right will gain, I'm sure either Renzi or Padoan will be appointed and will continue until April 2018. A third possible alternative is Pietro Grasso, another institutional figure (he's the President/Speaker of the Senate).

Roberto,

Thanks for another interesting analysis. With my limited language skills, it's difficult to get a clear view of the situation and all the "players". Although it doesn't affect me directly, I'll be anxiously waiting to see what the President decides and whether Renzi decides to continue. Unfortunately he's been affected by what I call "incumbent blame", and incurring the wrath of voters for problems which may not be entirely his fault, such as the economy, immigration or whatever. That trend occurs in other countries as well.

Incidentally note that the Euro has been set up thanks to an international treaty, and referendums on international treaties are forbidden by law for obvious reasons.

I can't see the connection between the changes proposed by Renzi and the "oppressive bureaucracy". To tell the truth I've managed my company for 15 years and I'm still waiting to meet this famous bureaucracy.
I think it's the way romans would call any rule that blocks them from finally change their city into a far west style dump. But of course I may be wrong.

Berlusconi told his last 5 supporters to vote no, I guess his newspaper thinks this is enough to cry about a "revenge". Silvio is 80 and bored: old guys need such small things.

I don't think Renzi will be so stupid to form a new government as if nothing or almost nothing happened. It would mean even more votes for Grillo and his "not so leftist" party in the next elections.
If 68.8% of citizens go to the polls and you loose 60 to 40, the message is quite clear! 68.8%... Wow!

The present Italian constitution - that the overwhelming majority of the Italian people asked to be maintained unchanged - forbids referenda on taxes or international treaties, so referenda on Euro or on exiting EU are at present impossible. Amending the constitution to allow them would be possible but time consuming - the amendment has to be approved twice in the same text by each chamber and if the last vote is not by a 2/3 majority, a referendum on the amendment is possible - and it turned out to be quite difficult to win. Should euro or EU collapse, they would collapse on their own, not due to an Italian referendum.

This is fascinating. Without intimate knowledge of Italian government, I thought Renzi was toast.
Thanks for the insights, Roberto, Dario and lachera.

Good heavens, I remember exchanging $10-$20 for some ridiculous number of lire. Made a budget-strapped student traveler feel positively rich...until actually having to spend 'em. :O)

Looking at lire versus euros selfishly as a tourist only, I'd like to see Italy keep the euro, Britian forgo Brexit and convert to euros, and yet more of Europe including Switzerland, Hungary, The Czech Republic enter the the European zone. It makes my life so easy. . .

But, independent currencies allow countries to devalue national debt in ways often necessary. Provided Italy remains part of the European Union (which has great economic advantages for all of Europe), I won't mind dealing with another currency.

Good call Roberto! Renzi just left the Quirinale Palace where his resignation was tendered but not accepted.

No change of that scale (currency) would happen "soon."

But the BBC is saying that Renzi agreed only to stay on until the 2017 budget was passed?

The President asked Renzi to postpone his resignation after the Senate approves the 2017 Budget Law, that's been already approved by the lower chamber.

It seems, but I can't believe it, that mr. Mattarella was quite upset that Renzi didn't think at this problem before resigning in front of cameras yesterday night.

So upset that it seems he said more than 3 words in 30 minutes, unbelieveble!

The last headlines I saw a few hours ago on Porta a Porta were speculating there will be an election in February. From what I can gather, the budget is supposed to be passed in the very near future, so I suspect Renzi might be gone long before February. He was young (for a politician) and energetic, and I thought he was mostly doing a good job (although I don't have the same perspective as someone living in Italy). In any case, I'll be sorry to see him go, and I hope this isn't the end of his political career.

I'm not sure Grillo will be a good replacement. Some of the things he's proposing may destabilize the financial picture even further. For a comedian, I'm surprised at his demeanor as he always looks angry.

Might not be a bad outcome for tourists if Italy went off the Euro, but probably not good for Italy. As a high-debt country they would probably devalue the currency. Not sure how that would work with respect to existing Euro-denominated debt. Seems likely that the Lire would grow weaker vs. the dollar quickly though. That said, anything contributing to the possible demise of the Euro could be a harbinger or broader economic cataclysm.

Did Renzi actually resign yet - can't seem to find any news.

I think Renzi wanted out.

It must have been hard to be hated both by the opposition (which is to be expected) and within your own party.

But when you come to power so swiftly with the declared intention of getting rid of the old professional politicians and shake up the system, don't expect the "old guard" is not going to fight back. Nobody likes to be put aside by a young kid, especially when you are a politician who's been milking the system and the privileges that come with it for so many years.

I expect the "professional" politicians will come back to occupy their old chairs and nail their bottoms to them even more firmly. Also I don't expect that the ridiculous number of legislators Italy has in Parliament (630 in the House and 315 in the Senate) will ever go down.

Those politicos are not going to downsize themselves especially when your salary is €10,435 month and in addition you receive a monthly lodging reimbursement of €3503 per month, an airport private transfer (taxi/limo) reimbursement of €1,330/month, and free transportation on trains (first class), ferry, airlines. And that doesn't include the reimbursement for your collaborators' cost. Of course all you need is to serve for 5 years, and you get pension for life starting at the age of 65.

Holy crap, Roberto. I wouldn't want to leave that kind of deal either. And 945 in the House & Senate as opposed to our 628. Yep, that's nuts.

But are we seeing a few parallels to our government? I was going to say the main difference is that most of this Renzi stuff appears to be a dance orchestrated in advance, but there certainly are plenty of behind-the-scenes shenanigans going on here too.

Roberto,

Good grief - 630 in the House and 315 in the Senate - that's incredible! Any group that large would be cumbersome simply due to the size. With the remunerations both while serving and after retirement, it's no wonder Italy is in financial trouble. Our system here in Canada seems "streamlined" compared to that (up to 105 Senators and 338 M.P.'s). I suppose the larger number in the House could be attributed to the larger population in Italy (representation by population)?

I can very much understand why the old guard would want to maintain the status quo, and why they would do whatever necessary to eliminate anyone who could change that.

Renzi's entire career since high school seems to have been centred on politics. Does he have any other profession? It doesn't appear that he's eligible to run for President since he's under 50 and the job won't be open until about 2022. I suspect that he will "land on his feet" and be in another job before too long.

Roberto, if there is somebody milking the system, Renzi is milking it as well. I remember the time he was mayor in Florence, you could easily spot his cronies in the administration as they earned exactly double the standard amount. And the lady that failed in the role of head of Florence city police, he brought to Rome and untrusted her with the task of materially writing out acts. (This is why so many of them get cancelled in constitutional court). Another example: just a couple of months before being elected as head of Florence province, Renzi's father hired his son as an executive in his own firm. This way he paid his son two months of social security contributions, after that the same contributions (executive contributions, so quite high) were paid for ten years - five years by the province, five years by the city administration - like Renzi had been a highly paid executive in his father's business. Two months out his pocket, ten years out of public funds. - He tried to shake the system not for public convenience, but for his own convenience.

Jay from Chicago
I don't know where you got the 628 legislators from.
In the U.S. Congress there are 435 Representatives in the U.S. House of Reprentatives and 100 Senators in the U.S. Senate. That is 535 in total.

Italy, with less than a fifth of the population of the U.S. has 410 legislators more than the U.S.

California, with 40 million residents (2/3 of Italy's 60 million) has only 80 legislators in the lower house (California State Assembly) and 40 in the California Senate.

Tuscany's Regional Council has as many members as California's (80 Assembly members) although Tuscany has 1/10th of the population (3.8 million).

It doesn't end there. There are over 40 city council members in the City of Florence, a city of less than 380,000. Similar numbers or more are in every Italian City over 100,000 people.

Compare with 8 council members in the City of San Diego (pop. 1.4 million) or the 16 members in the City of Los Angeles (pop. over 4 million).

I won't mention the members of the Italian Provinces' councils, since Renzi was at least able to abolish those during his short tenure.

Ken.

Renzi is not rich like Berlusconi, but he is not poor either. His family owns a marketing company. That is probably where he learned about his communication and marketing skills, which he undoubtedly possessed. Not too many Italians had his abilities to be on stage.

when your salary is €10,435

That's the gross pay, the real salary is 5,000 € If you consider what they really put in their pockets, they are at the fifth place in Europe.

the ridiculous number of legislators Italy has in Parliament (630 in the House and 315 in the Senate) will ever go down.

Looking at the number of MPs every 100,000 citizens, Italy is the 22nd European country with 1.6 . I guess there are 21 more ridiculous countries.
First is Malta. Denmark is 13th with 3.2 , UK is at 2.2. Slightly better are France 1.4 (925 vs 950) Spain and Netherlands 1.3 . Germany , as usual is the best: 0.9 , but they also have tons of elected local politicians in their powerful Regions and cities.
It's an European problem, but as always Italians would rather repeat what people say instead of checking the facts: http://www.ilsole24ore.com/art/notizie/2014-02-07/l-italia-ha-troppi-parlamentari-ma-europa-e-solo-ventiduesima-105200.shtml?uuid=ABu203u

Personally, I welcomed the Euro because it was easier to calculate/convert to dollars than the lira. I remember getting a hotel bill for 359,678L and thinking...WTF?

All of my Italian cousins ands friend were never in favor of the conversion because, as they told me, everything was twice as expensive. After traveling in Italy annually since the conversion, I've yet to talk to an average person who liked the Euro.

Buon viaggio,

lachera
Do you want to deny Renzi his constitutional right to bring with him his pretty "interns" to Rome?
Who's going to take care of his ministerial needs when Agnese stays home in Pontassieve?
Didn't Renzi say that his "Leadership Role Model" he aspired to emulate was Bill Clinton?

darioalb
Yes, the large numbers of legislators is a European problem, not only Italian.
Italy's system after all is shaped after France's (thank you Napoleon) and France has 925 parliament members.
That is why my comparison is with the United States.

However if you want to look at a symbol of efficiency you should look at India: 545 members in the Lower House (Lok Sabha) and 250 (max.) in the Upper House (Rajya Sabha). Not bad for a country of 1,252,000,000 people.

I wonder if this is at least partially, another consequence of the referendum.....

http://www.bbc.com/news/business-38267196

Apparently that bank (among others) has been having problems for awhile, but these now seem to be at a critical point.

The bank has been having problems since 2007, when they bought from Santander another bank (Banca antonveneta) out of political considerations, paying it exactly double its value. Add on top of it a string of politically motivated loans that went awry as well. - As the Siena local powers are involved in appointing the bank management, it has always been a PD backwater and you can see it now.