Billionaire Democratic Party contributor George Soros is warning of another major worldwide financial crisis as Italy is struggling to form a new government amid a populist, euroskeptic revolt.

Bloomberg:

A surging dollar and a capital flight from emerging markets may lead to another "major" financial crisis, investor George Soros said, warning the European Union that it's facing an imminent existential threat.

The "termination" of the nuclear deal with Iran and the "destruction" of the transatlantic alliance between the EU and the U.S. are "bound to have a negative effect on the European economy and cause other dislocations," including a devaluing of emerging-market currencies, Soros said in a speech in Paris on Tuesday.  "We may be heading for another major financial crisis."

The stark warning from the billionaire money manager comes as Italian bond yields have jumped to multi-year highs and major emerging economies including Turkey and Argentina are struggling to contain the fallout from runaway inflation.  Soros, who has been the object of ire by the government of his native Hungary, saved his gloomiest outlook for the EU.

"Everything that could go wrong has gone wrong," he said, citing the refugee crisis and austerity policies that catapulted populists into power, as well as "territorial disintegration" exemplified by Brexit.  "It is no longer a figure of speech to say that Europe is in existential danger; it is the harsh reality," he said.

He might have added a "cultural disintegration" as well, given the massive influx of newcomers who do not share the cultural values of original Europeans. 

So what does he propose we do about it?

Soros's proposed remedy for some of the ills facing Europe is an EU-funded Marshall Plan for Africa, worth about 30 billion euros ($35 billion) a year, which would ease migratory pressures to the continent.  He also proposed a radical transformation of the EU, including the abandonment of the clause forcing its member states to join the single currency.

"The euro has many unresolved problems and they must not be allowed to destroy the European Union," he said.

The idea that $35 billion every year is enough to address war, corruption, abject poverty, lawlessness, and terrorism in Africa is ludicrous.  But Soros isn't as concerned about solving Africa's problems as he is about wealth redistribution (everyone's but his wealth, of course) and a blurring of national lines to create a one-world government.

But he has a point.  Italy is the third largest economy in the E.U., and the spike in government bonds is a direct threat to the E.U.'s existence. 

The recent election in Italy brought populist, euroskeptic forces into nominal control.  But they are having a difficult time forming a government.  It's been three months, and the two major populist parties cannot form a government to enact their euroskeptic agenda.

BBC:

The two big winners in that election – Five Star and The League – attempted to join forces on Sunday but abandoned efforts after President Sergio Matarella vetoed their choice of finance minister.

Mr Mattarella said he could not appoint the Eurosceptic Paolo Savona to the post, citing concern from investors at home and abroad, and tasked Mr Cottarelli with forming a government instead.

The rare move by the president to veto the choice of finance minister sparked fury from both populist parties, who say they will reject Mr Cottarelli's nomination in parliament.

After the president blocked Mr Savona's appointment, Five Star leader Luigi Di Maio urged parliament to impeach the president.

Impeachment of three previous Italian presidents has been attempted but failed.  Impeachment is approved by a simple majority of both houses of parliament, but the final decision rests with the constitutional court.

Mr Di Maio later called for peaceful protests and urged his supporters to unite and "make some noise".

The League's chief Matteo Salvini also criticised the president's decision, calling for mass protests and accusing Brussels and Germany of meddling.

The populists ran on an agenda that would blow up E.U. budget and debt targets – so, of course, Brussels and Germany are "meddling."  It's Germany and the E.U. Central Bank who would be forced to bail Italy out if its debt gets out of control. 

European stock exchanges are extremely nervous about the Italian political situation.  There have been some calls in Italy for a "snap election" that Five Star and The League believe would bring them a solid majority with which to form a government.  But another election would be a crap shoot, and given the threats coming from the E.U. if Italy doesn't abide by budget and debt rules, some citizens less committed to the populist agenda might vote against them this time.

It's a mess, to be sure.  The fragility of some economies like Greece and Spain means that any shock to the system could bring their economies into crisis as well.

That's why Italy's populism is far more a threat to the European Union than Brexit and why investors like Soros are so nervous.