Structurally, european countries are very constrained in their response to the virus in terms of their fiscal and monetary response. Italy, for example, cannot simply print money. The general feeling is that Italians don't work hard and have overspent, somewhat like people feel about the Greeks, who only obtained membership based upon lies enable by Goldman Sachs. So no one wants to help.
http://blog.ilgiornale.it/bertirotti/2020/03/30/noi-leuropa-e-la-verita/
"They don't want to help us because our public debt, which continues to rise every second, has allowed us to live beyond our means. And we have accumulated too much of it. Therefore, the countries of northern Europe are obstructing, in this moment of pandemic, thinking of an after with the same categories as the first . And they do it believing that the economic need concerns only the Mediterranean countries. They seem convinced, with this reasoning, that we are the culprits of the pandemic situation."
The big discussion now is about debt mutualization. What they were calling "Eurobonds", and what they're now calling "Coronabonds". And of course, Merkel and company are having none of it. The Germans can't stand the Italians, and I learned in Rome 30 years ago the Italians can't stand the Germans as well.
So the Italians have been very constrained in their ability to spend money. They already had the highest interest rates and the worst debt/gdp of the major countries in europe. Was over 130% before the crisis.
Now the economy will crash at least 25% and spending will increase significantly, if they can find the cash. So the deficit will blow out, probably >10% of GDP. Italian 10 year bonds are paying 1.5%, solely because of the implicit ECB backstop. Absent that, they're would be at Greece pre bailout levels, like 30-50%. The ECB has been used as a method to backdoor mutualization (buying bonds that will never be paid back) for both Greece and Italy. There has been discussion of the ECB writing off those debts. Which would cause a fucking riot in Germany. The ECB has recently pledged a quite modest $750 billion in open market purchases for the entire EU, not merely Italy.
Remember, when Italy asked for help from the EU and other governments, only China responded.
https://foreignpolicy.com/2020/03/14/coronavirus-eu-abandoning-italy-china-aid/
Coronabonds were rejected at the last EU summit.
If you've been to Italy, you've probably noticed there are a whole lot of EU flags hanging off buildings. I kind of understand the feeling, it's a kind of inferiority, a kind of hope you get from being part of something bigger. And then the frustration that comes when you see the failure of aforementioned gigantic, impersonal, and ultimately uncaring, unelected supranational government. Here's a story about Italians taking down their EU flags. Keep in mind, that's a europhile outlet printing that.
Italian banks, not gonna do the detailed analysis, but a fair assessment of their value is zero, IMO. They've been extending and pretending since 2008. They'll mostly go bankrupt, and quickly. https://www.barrons.com/articles/italys-banks-will-struggle-under-the-coronavirus-outbreak-warns-fitch-51584112889
There is a good chance for a V-shaped recovery in the US. The US has workable leadership and a great starting point. That is not the case here, because Italy neither controls it's currency nor its central bank and has been shrinking its economy for 20 years. In October of 2019, unemployment was 9.7%. And the EU (mostly Frau Merkel) has basically said go fuck yourself. Italy has been in decline for twenty years. Debt to GDP is headed to >200% in the near term.
Italians are a very frustrated and unhappy people. The obvious best response is leave the monetary union and inflate. My sense, however poorly I'm able to discern these things, is that their media is controlled by the europhiles and there isn't an organized "small government" movement. The Lega may benefit in the end, they are the anti-EU party. I honestly think Italy is much closer to the end of whatever the narrative is than anyone, at this point, realizes. They have a docile media and corrupt leadership all the way up to the EU, and there's a medical crisis ongoing, but you can only extend and pretend for so long. The internal divisions are ripping this place apart, even if the media doesn't present that narrative.
It's gonna end badly here. I'd look for the Euro to fall a bit in the near term.