Coffee House

Italian elections: ‘The worst possible outcome’

26 February 2013

3:16 PM

26 February 2013

3:16 PM

Forget Moody’s. If you want to see market panic, just look at Italy. As Isabel reported this morning, the unexpectedly strong performance of Beppe Grillo’s anti-establishment party, the Five Star Movement, has produced an extremely close election result, and no clear winner.

While the electoral system guarantees a majority in the Chamber of Deputies for the group with the largest vote share (Pier Luigi Bersani’s centre-left group), it does not do so for the Senate. With no group securing a majority in the upper house, Italy now faces coalition negotiations and likely another election.

Citi calls this ‘probably the worst possible outcome for Italy’ — thanks to the political uncertainty, the ‘anti-austerity message being conveyed by voters’ and the ‘absence of a cohesive and credible political leadership’. And the markets seem to agree. The Italian stock exchange has fallen by 6.7 per cent since yesterday afternoon, and the euro is down by around 2 cents against the dollar, from $1.33 to $1.31. The yield on ten-year government bonds has risen by 0.32 points, from 4.49 per cent at close yesterday to 4.81 now – though it’s still nowhere near the 7.4 per cent high seen when Berlusconi resigned in November 2011.

[Alt-Text]


Unlike the UK, Italy’s economic problems do not include a particularly big deficit:

Indeed, the Italians have eliminated their structural deficit, something the UK won’t achieve until 2018 at the earliest:

Instead, Italy’s problems are a very weak economy and high government debt. It’s GDP is now 7.7 per cent below its pre-recession peak, and is expected to continue to fall this year:

And whereas the UK entered the recession with government debt below 40 per cent of GDP, Italy’s was already around 90 per cent, and now stands at about 100 per cent:

If the Italians are to tackle that debt burden, they’re going to need to press on with the austerity programme they’ve shown such hostility towards in these elections.

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Show comments
  • CHRISTOPHER WHITE

    I.Fisher 1933 ‘debt-deflation trap’ – if you contract economy ratio INCREASES.
    Italy needs standard IMFpackage (apart from EZ ones DSK bounced them into) -austerity + DEVALUATION + default
    Only growth will reduce burden but 3 of 4 sources – business investment, consumer spending and govt can’t contribute because of economic situation. If Italian businessman would you invest? – if consumer spend? (unemployment up, wages down, taxes up and fear of this) – govt has to reduce spending. That leaves NET TRADE so you devalue to boost exports & tourism & reduce imports.
    Italy like P G S has had the PAIN but no gain. Greek economy has

  • Alexander Grayson

    Perhaps Italian people have had enough of the EU dictatorship, you know the EU is in trouble when their puppet PM monti comes fourth with less then half the votes of a comedian

    Sign this petition to restrict Bulgarian and Romanians from entering the UK:

    http://epetitions.direct.gov.uk/petitions/41492

  • Dogsnob

    Lovely graphs. Nearly as colourful as one of Mr Nelson’s posts. All bollocks though.

    We need one of these 5 star movements. Smoke the rats out of their holes.

  • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

    Beppo’s Blog was the 7th most popular in the world !!!!

    http://www.guardian.co.uk/world/2013/jan/03/italy-five-star-movement-internet……”Just as newspapers, he argues, are doomed to extinction because they
    stand between journalists and readers, so parties are heading for
    annihilation because they stand between the electorate and the
    authorities.The M5S is pioneering “a new, direct democracy that
    will see the elimination of all barriers between the citizen and the
    state”…………..The first step was the creation of Grillo’s blog, which by 2007 had
    become the seventh most popular in the world, even though written in the
    language of a country with less than a fifth of the population of the
    US and one in which fewer than 40% of households had a computer.”………………The blog also stimulated an extraordinary degree of participation: one post attracted some 10,000 comments.

    • Daniel Maris

      Italy in common with other Mediterranean countries has always had a strong anarchist movement. Under the pressure of the crisis, this seems to be coming to the fore.

      However, Grillo doesn’t look as if he has any real policies. It’s as if we elected Frankie Boyle to be PM.

      Blogs are fine for discussion of policy, but not for implementation of policy.

      • the viceroy’s gin

        Yes, one needs an authoritarian hand to develop a proper socialist model.

        • Daniel Maris

          Libertarianism is a pipe dream. All governments depend on authority. It is simply a question of how the authority is formed and exercised. I believe in devolved authority: small government, referendum democracy, co-operatives, domestic energy generation and so on.

          • the viceroy’s gin

            Yes, and you NSDAP types like the “authority” part of government best.

            The better to bring on your death panels, windmills and child snatching dreams.

            It’s cute the way you call that “small government”. You NSDAPers have always been so cute.

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              Small Government in the form of each Gauleiter

            • Daniel Maris

              Yeah, yeah. The usual nonsense.

              • the viceroy’s gin

                Excellent comeback. I need to take a screenshot of that for further study later.

                It’s deep.

                And I must google up some Wagner, for proper background music as I study it.

          • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

            Yes I have always favoured domestic nuclear units and wonder if Iran will be the first to perfect them. They could replace combi boilers which are such a mess with foul air at eye level

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        Beppo doesn’t want to run the country. He wants to give the Youth of Italy a voice in their destiny: – “we have come through the worst nightmare that the Italian people have
        ever experienced, in spite of their long history full of catastrophes:
        that of not having a future. Of not having what every person needs in
        the idea of the future: that it’ll be beautiful, joyful, new, different,
        full of life. Is it perhaps possible that having a balanced budget,
        even though it is considered to be indispensable, can really make up “The
        Future”? Is it perhaps possible that the European Central Bank,
        even though it may be willing to buy so many Italian bonds, can play the
        part of the Good Fairy? Enough, yes – enough! We absolutely need to go
        back and live the true life , that life that has always made the Italian
        people very rich even when they were poor: the ability to believe in
        the future, to believe in the beauty of their land, to have trust in
        their joyous and lucky “star”.
        All this has been
        deliberately killed off. Buried in the lugubrious world of the priests
        of money, deaf and blind to anything other than the accumulation of the
        currency. Economists and bankers have become the masters of Europe and
        they have chosen Italy as the experimental centre of their power, where
        they are starting to take the place of politicians, who are by now,
        completely subservient and corrupt. They managed to do this so easily
        that even they themselves are gob-smacked. They perhaps had not
        imagined, in spite of their massive presumptuousness, that just the
        clinking of money would have been enough to be called in by the
        politicians and heads of State to take their places. In just one year,
        the situation has forced 45 entrepreneurs to commit suicide. A result
        that is truly worthy of respect! Italy has never been a suicide country,
        not even in war-time. However, the members of the government, have
        remained unmoved. Unfortunately, these Italians are “lazy bones”:
        they only know how to complain. The day after an entrepreneur committed
        suicide, Mario Monti went to console, not the despairing family, but
        the functionaries of the tax collection agency, Equitalia: they are
        certainly diligent workers!”

        • Daniel Maris

          Grillo sounds like what he looks like: a puffed up purveyor of pure wind.

          If he is saying he wants to default and relaunch the lira, he should say so. It’s not a daft polict really. However, he uses up all those words not saying anything. I can’t stand politicians like that. And whatever he claims, he is now – for better or worse – a politician.

          • Hexhamgeezer

            but ….Dan, you love wind….

            • Daniel Maris

              LOL, yes but not drawn up from nether regions and passed through the mouths of politicians.

              I prefer politicians who actually say something but understand what makes people tick. To that extent I suppose

        • Makroon

          What a load of bollocks from Grillo. At least Farage is plausible.

          • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

            Farage doesn’t win 25% vote in an election so I guess the English find him implausible

            • Vulture

              He’s going to win more than that in Eastleigh tomorrow TT.

              • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

                Beppo won it NATIONALLY but if Farage can manage it LOCALLY all to the good !

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        You know Daniel, you sound like a Communist

        • the viceroy’s gin

          Well, definitely a socialist, but more of the Shickelgruber persuasion, I should think.

          • Daniel Maris

            I’m a populist and certainly not a racist.

            • the viceroy’s gin

              Yes, death panels, windmills and child snatching are all quite popular, as we know.

        • Daniel Maris

          I think you’ll find that Communists, Social Democrats, Centrists, Conservative and others will all be saying that. What are Grillo’s policies. Does he want to stay in the EU, get out? Does he want to increase people’s wages? Does he want to default on the debt?

          I’ve no idea what he wants to do. Maybe nothing. But if nothing, then politics abhors a vacuum .

    • Makroon

      Are you really getting so carried away with the fun of it all, that you think the loon Grillo is actually a logical ‘uman being, with a well thought out plan of action ?
      (and UK Uncut are wonderfully idealistic radicals too, I suppose ?)
      Time for a reality check.

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        Something has to change. I am not prepared to spend my life in Osborne’s little experiment. It is time politicians were removed and executed. This Ship of State is foundering and the utter complacency of the English suggests they will eat crow for decades and willingly live in a dtowded cattle boat swimming in their own excrement. At least SOMEONE is starting to say no and is not kow-towing to The CIty or Bankers. The English in contrast are content for RBS – a State-owned Bank to fund Kraft with £12 billion to take over Cadbury and move production to Poland as long as The City makes money. The English are Whores to Finance

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        Grillo may be a “loon” as an Accountant he probably qualifies, but he has mobilised thousands of unpaid volunteers which other parties cannot manage. Where in the EU is a “well thought out plan of action” ? So far it is to spend 2 – 3 generations of stagnation and hope the rest of the world will not advance as Europe’s demographics push people into geriatric poverty. You Makroon obviously have income, work, home – but what about the 18 million in the EU that do not ?

  • Andy

    Actually it is all rather amusing. So what the EU Fascist going to do ? Send in the tanks ? After all they think nought of overthrowing governments they don’t happen to like.

    Anyway they are in a bit of a pickle. The Italian President is unable to dissolve parliament again because his term has less than 6 months to run, so the Italian Constitution forbids it.

    • Austin Barry

      It is indeed immensely amusing and encouraging that the Italians have sent a robust ‘Vaffanculo’ to the EU fascists. Would that we were given the opportunity to the same.

      Meanwhile, a couple of glasses of Barolo to be consumed with a cheery cin-cin to our Italian chums.

      • Daniel Maris

        Which of the Italian parties is calling for the withdrawal of Italy from the EU.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          Beppo wants the Lira for Italy to run its own affairs. In EU Terms that is Treason

          • HookesLaw

            So no Italian party is calling for the exit of italy from the EU then? Do you ever care to spend a nodding acquaintance with the facts?

            The Euro of course has been a disaster. Thats easy to verify.

            It seems strange that there should be surprise at the notion of a coalition government in Italy.

            • the viceroy’s gin

              They’d never call for withdrawal from the EU, because that would mean the ECB would cut them off, which they don’t want and cannot afford.

              Meanwhile, the Brusselscrats need them to stay in the EU, or the great dream project dies. The Italians want to make sure the EUcrats pay for their dream. They’re the only ones who want it, afterall.

            • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

              Only one British party is calling for withdrawal from the EU. However there is no mechanism to withdraw from the Euro especially when the Bank of Italy is a suunsidiary of the ECB and the Head of the ECB is the former Governor of the Bank of Italy and it is he who is propping up the Italian Bond Market permitting Italy to defer any economic reforms. Greece operates the same way and has ceased to implement Troika requirements.

  • David Simpson

    No we do not want to forget Moodys, we need to remember it day after day after day until the glorious day this coalition is thrown out of office

  • the viceroy’s gin

    Who cares what “Citi” thinks?

    You Speccie teenagers need to get your nose out of Citi’s nether regions. We get it that your own pockets might suffer, but don’t think people aren’t watching you here, and your debasement.

    Everybody knows this is about the banksters taking a haircut(s) in Italy, just like they took a haircut(s) in Greece. It gets worse and worse for the banksters, day by day, in both cases. If the People reject what the banksters and their poodles like you Speccie teenagers have on offer, then the banksters have to take a haircut.

    Either the ECB takes a haircut, or the banksters take one. The EU is fully on board to ensure that NEITHER takes a haircut, and that was Monti’s job, obviously. But the EU will settle for the banksters taking a haircut(s), as in Greece. The Italian voters, like their Greek brethren, appear to be forcing that outcome.

    And that means the Speccie teenagers’ benefactors at Citi get dinged. My heart is breaking. It’s just shattering at the thought of those poor Londonistan banksters having to get up off some money.

    Roll on Beppe Grillo!

    • Martin Adamson

      We are getting near the point where the truth cannot be hidden any longer. The “banksters” as you call them are actually the Franco-German political class who have bet 30 years’ worth of their nations’ state pension funds on the roulette wheel of the Southern European economies. That was why the Greek, Irish, Italian etc states have been made to pay their debts at full price. Once the Northern European public find out that their welfare states have gone down with the Euro-Titanic they’ll be ransacking Ikea for rope, barrels of tar and feather pillows.

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        They are going to have to default. Then they will “suddenly” discover that huge amounts of Derivatives are fraudulent or simply pyramided on the same underlying asset which is really not an asset. The whole problem has been caused by Insufficent Collateral for the Debt Issued because the re-hypothecated Collateral. Governments simply kept the saucers in the air by issuing Credit Notes to keep the Derivatives moving so noone had to honour their commitments. They simply divorced the Banking System from the real economy and transferred real resources from real people to prop up Banks’ fantasy Balance Sheets

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          The Netherlands has nationalised SNS Bank and declared the Bonds worthless

          • the viceroy’s gin

            Wonderful.

            And that’s what must happen. The worthless paper, the toxic waste, must all be heaped into a pile and set afire.

            And then we move on.

            “Arise and take our stand for freedom as in the olden time.”

      • the viceroy’s gin

        …and guess who’s going to get paid, after the haircuts?

        …Will it be Citi, the hedge funds, the derivatives holders, the alternative investment geeksters and mbs mob?

        …or will it be the hundreds of millions of people and their pension funds?

        …so on the one hand, we have murderous Greeks and Italians, seeking to burn down the town, juxtaposed with more gentile but ultimately just as deadly serious Scandinavians and Germans, grimly doing what needs doing.

        …and the Londonistan banksters are the safety valve in both cases.They can be liquidated with great facility. Now it’s only a matter of whether the subjects the banksters now rule go along with the liquidation, or are alternatively foolish enough to listen to Call Me Dave, “Citi” and Speccie entreaties to impoverish themselves to keep these thieves afloat.

        See now why Call Me Dave rolls over for the Brusselscrats? They’ve got him by the grapes. Dave wants to impoverish the nation, rather than see a proper liquidation of his bankster buddies. And he needs the Brusselscrats’ help in seeing the cash keeps flowing to his bankster benefactors. He needs to pay the danegeld, to keep the Danes on side.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          Interestingly enough Spiegel reports Greece is watching Italy as the Troika visits again. Spiegel talks of “Bulgarian Situation” where the Government was toppled as it tried the Euro medicine. You are probably right, the great Banker Globalisation Scam which came out of the 1980s is at the end of the road and Banks will have to become whjat used to be Utilities……mind you so will Utilities – they have acted too much like Banks. Every Business has been rated by how much it operates like a Bank rather than a Producer or a Servicer

      • CharlietheChump

        And horsey meatballs

    • Count Dooku

      Please cut the “Speccie teenager” thing. It’s getting tiresome and detracts from your usually good and sensible arguments.

      • the viceroy’s gin

        No, I don’t think I will, and the Speccie teenager jibe isn’t a “thing”. It’s a quite sensible judgment of the quality of writing and analysis in this publication, which oddly enough fancies itself superior somehow, and isn’t shy of making such foolish pronouncements, regularly.

        • Count Dooku

          Then state why you disagree without the ad nauseum jibe. Like I said, it detracts from your core argument and makes it harder to read.

          • the viceroy’s gin

            I get that you don’t like it, but it’s going to continue on. That said, best let it go now, lad.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          True. If you look at the CVs on some of these journalists they really need to read Scoop and go off to Afriica for some real-life experience…………..Jonathan Jones for instance, Liberal Democrat; Obama supporter; numbers geek………..”On the way to #Eastleigh to help get @Mike4Eastleigh elected! #LibDems”

          • the viceroy’s gin

            I only wish he was a numbers geek.

            I’m a numbers geek. He’s not. He’s one of the Speccie’s teenagers.

      • Daniel Maris

        Viceroy is nothing without his “tropes” – the equivalent of a nervous tic in the person.

  • Archimedes

    At least we can add one more thing to the list of life’s certainties: death, taxes, and a euro crisis in spring.

    • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

      Riots start in April as the weather improves

      • Archimedes

        Typically periphery countries. They can’t even be bothered to riot unless the weather is good. If it was Germany, on the other hand…

        • Count Dooku

          Poland and Russia in the winter?

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          Actually I was looking at the UK and reviewing riots going back over several years back to 1981 – but you did mention “periphery countries” and this is the most peripheral in Europe. You would be surprised at Germany – try Berlin, and you might want to watch policing when Dortmund play away. Autonomen have quite a track record in Berlin and Frankfurt……..try Bulgaria and see what has been going on there. Spain has been very busy as has Greece which is why Greek TV cannot now be seen in Turkey. Watch Hungary too,

    • Daniel Maris

      So you are saying that THIS time the EZ is definitely going to break apart? That is your prediction? I’d just like to record that so I can play it back to you.

      • Archimedes

        Dan…you’re getting to be a bit annoying. Why don’t you go read that book you like…Care Bears?

        • Daniel Maris

          Well if you are going to make things that sound like predictions without saying they are predictions, that’s being a tad tiresome I would say.

          • Archimedes

            I wasn’t making a prediction, Dan – it was a joke.

  • Adrian Drummond

    It’s the worst possible outcome in Italy for whom? The markets, the EU or democracy?

  • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

    Bersani is a Communist linked to the disastrous and criminal MPS Bank through his PD Party and in turn to Mario Draghi. Go read Grillo’s Blog and see how angry people are at Corruption and EU Diktats……..http://www.beppegrillo.it/en/……….Citibank can write whatever rubbish it wants, but can it explain Robert Rubin’s role or how Pandit made such a colossal mess ?

    Italians are telling the EU to take a hile. It is a Founder Member of the Club of Six and its population is fed up. What kind of a place is it where Angela Merkel picks up the phone to Italian President Napolitano, a Communist who supported the USSR against Hungary in 1956, and arranges for him to depose the Prime Minister Berlusconi and make Mario Monti a Senator so he can run Italy as an EU Puppet. Monti gained 9% votes. It must seem like 1943 all over again with Berlin taking control of Rome

    • HookesLaw

      Does grillo’s blog explain how you spend money you don’t have? This seems a good trick to me and I’d like to know how its done.

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        Read it and find out. You can read can you ?

      • Daniel Maris

        Ask the Bank of England. It’s called Quantitative Easing. Last count I think we were on course to do £70 billion of it.

        • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

          £345 BIllion

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        The BBA released figures on lending and deposits for the big five to July 2012. The data show that the big five banks have $4.2trn in
        assets. Of this £4.2trn in assets, only £297bn is held as a stock of loans to non-financial companies in the UK, or 7% of total assets.
        Another £322bn has been lent to other financial institutions, while £800bn is held in mortgages and consumer credit. Investment in government debt and financial securities (stock, bonds etc) stands at £1607bn, or more than five times the amount lent to the productive sectors of the UK economy………………https://thenextrecession.wordpress.com/2012/08/25/qe-uk-banks-and-the-economy/

    • dalai guevara

      Italians are emphatically not telling the EU to take a hike. Every Italian knows what the true issue is. I wish you would not divert from fact that in essence, the UK faces the same issues.

      • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

        I think you should examine the role of the ECB and of TARGET2 and the meetings of Mario Draghi of the so-called independent ECB with EU Commissioners. You might also consider the EFSF and the whole structure of the EuroZone as integral to the EU. Simply because Britain is not a Euro member it fails to understand how integral to the EU the Euro now is. Germany has spent more bailing out banks than any other EuroZone State because it has systemic risk. The ECB has run up at least $1 Trillion in liabilities for Germany propping up Club Med States so they can service their bankers. There is no way to disentangle the Euro from the EU structure even if people think they can

        • dalai guevara

          Lord Almighty, Tom – *the EU* is emphatically NOT *economists and bankers*.

          It is you who has provided the source, now I quote from it and it most definitely does not identify *the EU* as the delinquent. I see from your response to me that you have understood that.

          • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

            I don’t understand your idee fixe. I am concerned with the Monetary System inside the EU and the corruption of the ECB. You seem to have a profound aversion to any criticism of the EU as an institution, I assume you have a religious fixation. I find to differentiate between a Monetary System involving EFSF and ESM and ECB and the peculiar manner in which Draghi meets with EU Commissioners in a political role to be highly suspect, as too was the manipulation of Bonds in Italy when removing Berlusconi. Further the accumulation of Italian Government Bonds by the ECB is highly suspect in that Italian Banks have offloaded securities to the ECB which is in line for a major haircut. I think it is time you elevated your analysis to look at the mess the EU/EuroZone Fusion has caused

            • dalai guevara

              Profound aversion? Now hang on a minute.

              Yes, the vultures are circling their prey. Greece has demonstrated perfectly how that works. Whilst I am not denying that some need more than a gentle kick up the backside, it is not the ECB that is the delinquent here. The ECB is the last straw for many, as -and I repeat- the vultures are circling the prey.

              Confusing, no equating the two makes you look as if it is you who cannot tell the difference between the prevention of havoc and pure speculation due to vicious greed. Now, what religion would we call that?
              Mammonism.

              • http://www.facebook.com/profile.php?id=100004981542519 Tom Tom

                Qu’est que c’est que ca ?

                • dalai guevara

                  Mammonisme(?), mon cher. Je ne crois pas que ca existe en pays socialistes.
                  Geldgier auf Deutsch…

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