We know all of the dry tinder. The big pile of external liabilities piled high in unproductive assets protected by the firebreak of public guarantees from a clean public sheet.
But the next downturn could bring something that will set fire to all of this virtually overnight: Italexit. Via Albert Edwards, king bear:
The orthodox view is that the Italian government is pursuing a ruinous economic policy and an unfolding crisis of confidence will drive up Italian bond yields, threatening contagion and a repeat of the 2011/12 eurozone crisis. Hence the orthodox view is that the newly elected Italian government must sing to the EC’s fiscally austere song-sheet.