Back in November 2011, when the ECB did its damnedest to make sure Silvio Berlusconi resigned and never came back (it succeeded in the first, but is failing in the second as the Berlusconi block is rapidly rising in the polls two weeks ahead of the Italian elections and is now one margin of error away from the frontrunning Democratic Party) the central bank knew the Bunga Bunga PM would be bad news for the status quo - a fixed exchange status quo which as we showed in an earlier post, is there merely to enrich the rich, and impoverish the poor.
The reason is that Sylvio has always refused to play ball with the banker oligarchy, whose survival depends first and foremost on the perpetuation of the EUR (as a collapse of the Eurozone means all reflation and DJIA 36,000 bets are off), and where every hint of a weakening of the Eurozone is to be eliminated at inception. Which is why news that Belusconi's coalition ally in the parliamentary election - Roberto Maroni, head of the Northern League, has suggested the creation and use of a local currency in northern Italy as an "alternative" to the Euro will hardly be seen as favorable by Europe's technocratic overlords for whom any initiative to structurally destabilize and weaken the European currency has to be crushed at the roots.
Silvio Berlusconi’s biggest political ally in the campaign for Italian parliamentary elections said he may support a plan to create a local currency that could be used alongside the euro in the region of Lombardy.
“Creating an alternative circuit, not a substitute but an alternative, is useful and can be used in moments of difficulty and economic crisis to give real help to companies,” Roberto Maroni, head of the Northern League, said yesterday in a video- recorded interview with Il Giorno posted on the newspaper’s website. “There are studies underway and we’re thinking about it. I can’t rule out that in the end we too decide to do it.”
Maroni said there were 13 examples in Europe of regional and business groups that have adopted an internal currency. Maroni is running for governor of Lombardy, the northern Italian region where the country’s business capital, Milan, is located.
Maroni said research on an alternative currency is being carried out at Milan’s Bocconi University, the school where Prime Minster Mario Monti taught economics and served as president. “We’re looking very closely at it,” Maroni said.
Furthermore, just as worrisome to the status quo is that as we previously reported, even with a Monti coalition, the frontrunning Centre-left party is currently just 2 votes ahead of the 158 needed to avoid a hung senate and yet another round of elections in a few months.
This means that should Berlusconi's Centre-right block continue to storm ahead in popularity, not only will the continuation of Italy's "reforms" be put into question as another political crisis emerges, but suddenly the threat of a relapse in EUR "redenomination" concerns will surge front and center. At least it would explain the recent urgency with which Pimco has been seeking greater fools whom to offload its current Italian bond holdings.
Because once a precedent is set where just a region in Europe has its own "alternative" currency, every other region will scramble to do just that. And with federal control still firmly in the hands of pro-status quo powers, it is likely that the next round of European risk-flaring will not be at the national, but instead at the regional level, which for the bulk of Europe's periphery, is just as insolvent, and just as in need of an external devaluation to offset the much more hated internal, i.e., wage-driven, attempts to become competitive with Germany (as also explained earlier).