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Everything You Need To Know About The Italian Referendum (& Should Be Afraid To Ask) : http://www.zerohedge.com/news/2016-12-02/everything-you-need-know-about-italian-referendum-should-be-afraid-ask

Excerpts:
While the post-Trump euphoria in US stocks has been the perfect distraction from the ugly realities elsewhere, this weekend's Italian Referendum could well be the biggest 'revolt' yet, topping Brexit and Trump. Should Italy vote "no", as polls forecast, PM Renzi may quit, leaving the Italian bank recapitalization would then be in jeopardy and, as Bloomberg's Mark Cranfield warns "we could be looking at a Greece-like market reaction on steroids."

Italy’s referendum on Sunday is the biggest risk for markets going into year-end, according to a poll of Citigroup clients, and several risk indicators suggest investors' concern is growing...

In case of a No vote, an interim government will likely take over and political instability and policy stagnation are likely, but the risks for euro exit in the medium term actually diminish

A Yes vote opens up the possibility of a reformist government from 2018, but also for a euro referendum, depending on the election outcome – so it increases the tail risk on both sides

The immediate reaction of Italian bonds will be to sell-off in a No and rally on a Yes but in both cases spreads will remain elevated

The size of government debt, NPLs and economic stagnation mean the country remains vulnerable in either scenario

How severe are Italy’s economic problems?

Italy badly needs an economic reform programme to boost its potential growth rate. Its potential growth is generally estimated at close to zero due to ageing and weak productivity growth (see Figure 4). Surveys of international competitiveness suggest it is structurally one of the weakest economy’s in the eurozone, with only Portugal and Greece ranked more poorly (Figure 5). The low potential growth rate exacerbates the country’s two other economic problems: its mountains of government debt and non-performing loans.