Italy's near future: Three scenarios
The fact: A hung parliament and a hard-to-control senate. Although Bersani's center-left coalition managed to win the majority of votes, it will not make a governing majority without setting up poltiical agreements with its rivals, which we see hard to materialize. This directly translates into concerns on whether Italy will be able to politically digest the very-much-needed austerity reforms to bring mid-term health both to its economy and the Eurzone's.
Scenario 1: New elections. It happened in Greece last year. It could happen in Italy. However, the probability remains the lowest. Those who literally believe in ECB's head Mario Draghi "doing-whatever-it-takes-to-protect-the-euro" and imagine a new and fast elections under the support and patronage of the ECB, would need more patience. Just remember that the eCB even refused to cut interest rates in the worst moments of the European crisis. Any help has to be approved by Germany and takes a long process to become reality. If a new elections is to be made in Italy, that will have to be born and promoted in Italy, by Italians. Unfeasible, to say the least.
Fabrizio Goria (@FGoria)
Scenario 2:Chaos. No majority government. A minority leaded by Bersani, trying to make alliances with Grillo in order to obtain political back-up to pass the bills. Similar case is ocurring in Sicily.
Scenario 3: A coalition between the PD and PDL, which is highly feasible if we refer to Berlusconi's declarations yesterday; but at the same time hard to control, since just judging by the coallition between Monti and Bersani we can say that these institutions are amongst the hardest to control in Italy. Such a coalition is likely to absorb the PD, favoring Berlusconi in the mid run, increasing its support and forming a majority towards Berlusconi little by little. After two years, Berlusconi would be be strongest candidate, with a weakend PD coming after Grillo.
To be alert:
Mario Draghi speaks, Europe listens. The European Central Bank president will be giving a speech in Germany.
Italian elections shatter beliefs about the future of Europe. (Gavyn Davies)