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Monday, February 25, 2013

Shocker in Italy: A comedian-cum-politician wins twice as many seats as the 'Brussels candidate'

So we now have a pretty good idea of the election results in Italy. And there are two victims: eurozone stability and Mario Monti.

The winner: comedian-cum-politician Beppe Grillo. 

We knew from earlier today that there would be a hung Senate, meaning massive challenges ahead in forming a functioning government.

But what about the Lower House - Camera dei Deputati? Well, counting is almost completed so these projections of how seats will be allocated (courtesy of Rai) will most likely be very close to the final results. Bersani's centre-left coalition managed to secure a majority. The gap between Bersani's centre-left coalition and Berlusconi's centre-right coalition is around 0.4%, so the huge difference in seats is due to Italy's electoral system (which gives the coalition or party with the most votes an automatic majority of almost 54%). 

But this is the shocker: Beppe Grillo's Five-Star Movement - the party that came out of nowhere and whose leader wants to hold a referendum on both euro membership and the restructuring of the country's debt - looks set to become the largest party in the lower house, and the second-largest one in the Senate. This is exceeding all expectations (though we warned you!).

Grillo is going to win 110 seats, more than double those of  Mario Monti - the outgoing technocrat PM who was the clear favourite in Berlin and Brussels. Monti will only have 46 MPs at his disposal.

The scale of this defeat was pretty obvious at the press conference that Monti gave earlier today, in which he said he was "very satisfied" with the election results but was visibly emotional.

In contrast, a relaxed but triumphant Grillo chucked about "having another hot tea and then going to bed" when interviewed by 'La Cosa' - the Five Star Movement's official radio/TV station.

That so many Italians voted for anti-austerity parties also bodes ill for the ability of the eurozone to press ahead with its cash-for-discipline recipe. We will provide a more detailed analysis once the final results are in. But for now at least, there's no doubt about who's having the last laugh...

N.B.: The breakdown above does not include the 12 MPs elected by Italians residing abroad and the MP elected in the Valle d'Aosta region, who are subject to different rules - a small caveat which does not change the bigger picture.


Rik said...

It simply looks that Italy can be written off, if that should not have been done earlier.

Pre-crisis it had 1% max structural real growth with a several percent 'overborrowing' which works as a stimulus.

Correct for that; correct for lower growth in the worldeconomy; correct for higher yields demanded by markets; correct for substantial lower growth in Europe especially, you end up with a structurul growth which is simply negative.

Add the fact that no structural changes look to be possible, this scenario cannot be changed under the current circumstances. You simply have structural negative real growth until something structural happens (be it reform or in the markets).

Add also the fact that Italy has ended up in the most overcrowded part (country-wise) of the worldmarket, with substantial parts of China and India, having catched up and other parts there and in other EMs, catching up fast, revenue or better the capacity to make revenue will be under pressure as well from this angle.

Add aging hitting in.

Simply the perfect economic storm with no proper captain on the helm.

Very similar the Greece btw, and Spain in other aspects even worse off likely to follow next. As is France.

Economic bad news not to be touched even with a pole.

Rollo said...

Funny thing, democracy.

Freedom Lover said...

My heartiest congratulations to Silvio & Beppo for nullifying Monti's pro-EU 2011 coup. Let's hope Silvio & Beppo can work well enough together so that Italy soon has a euro-referendum. And then votes to leave at least the euro so that Italy & its economy can at last have real room to recover. With luck this will start at least a Club Med rush for the (euro) door, & an end to the nightmare of Brussels-inspired EU-phile extremism.

christina speight said...

The Italian people have made one thing clear and that being forced to stomach a turncoat placeman dicator from Brussels was not acceptable and let's hope he departs the scene today to wallow in his fat EU pension.

I wonder where he will retire to ???

Maybe the crazy people win the eurozone capitals who hang on like grim to the poison that is killing them will awake to the realisation that the Euro must go to restore sanity to Europe's economies and growth to the world economy.

I note that there is no country of importance that cannot borrow IN ITS OWN CURRENCY. You cannot have individual sovereign debt without individual sovereign currency.

David Barneby said...

"It simply looks as if Italy can be written off "
Add to that Greece , Spain , Portugal , Ireland , France , maybe more .

The only hope for EU survival is to get rid of the Euro . You cannot have a large and so varied assortment of countries tied to a single currence and equal valuation .

The EU boasts its 500ml members ; but this Italian general election shows how they might vote given an EU wide referendum to show EU solidarity .

Gosporttory said...

What a brilliant result. Hopefully this may help in some way to speed up the ineviable implosion of the euro and wider gravy train, so as to let us get on with managing our own affairs again without all the crap and red tape from the bloated corrupt Brussels bureaucracy.

Bleenidd said...

When are we going to get some audited accounts from Brussels? That might help to make up people's minds as to what they want, for the future of Europe.