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Italy: The Final Countdown (With A Credit Suisse Voiceover)
Yesterday, when describing the situation in Europe, Robert Rennie, chief currency strategist in Sydney at Westpac said, "with Italy we’re talking about the third-largest government bond market in the world going into a meltdown situation." That meltdown situation could commence as soon as a few hours from now when the 2010 budget review is voted on. Here is Credit Suisse Giovanni Zanni summarizing the probability outcome matrix for Italy between today's key vote and the November 15 multi-year budget votes, both of which are implicit votes of confidence in Italian PM Silvio Berlusconi, whose position over the past month or so has been controversial, to say the least. In summary the outcome probability is as follows: no elections and new "national unity" government: 30%; no elections and broad center-right coalition government: 30%; early elections: 30%; and Berlusconi stays: 10%.
Italy: The Count Down, from Credit Suisse
The two critical dates for the survival of the government are today (parliamentary debate starts at 11am GMT, with a vote expected at 2.30pm GMT) with the Parliament voting on the 2010 budget review, and next week (before November 15, to comply with EU commitments) with the vote on the multi-year budget, whichincludes the pro-growth measures presented at the last EU summit.
The likelihood of the government surviving both votes, and particularly the mid-November one – being today’s vote on a technical document – is small, in our view. The most likely scenario, as we write, is that Mr. Berlusconi obtains just a relative majority today and then resigns or announces a broadening of the current coalition, in our opinion. That would change the dynamics for next week’s vote on the pro-growth measures. As an alternative, Mr Berlusconi could still go ahead with a confidence vote next week, and face a likely no confidence vote that would automatically force his resignation and make early elections more likely.
What happens if Mr. Berlusconi is voted down or decides to step down?
The President of the Republic will consult all the political forces – a process he has started last week - and verify if an alternative government is possible. If that's the case, the new government must get a vote of confidence in the Parliament. In this first scenario, a new government could be in place in around 10 days from the declared crisis. If no alternative majority is found in parliament, the President of the Republic will have to call for early elections.
We see four possible scenarios:
1) No elections and a new government supported by a “national unity” coalition. A mix of centre-right, center and center-left parties could support a “national unity” government, possibly led by a prominent technocrat with international credibility (ex EU Commissioner Mario Monti is often mentioned in this context), or by a member of the centre-right coalition. The programme, in this case, would be to implement over the next year or so the EU agreed plan and to change the electoral law. Elections would take place in 2013, their natural date. This would probably be the best option from a market perspective. We attach a 30% probability to this scenario.
2) No elections and a new government with a broader center-right coalition. This is an option that the center-right MPs that left the majority over the past few years would likely favor. It would reinforce the government, with a likely new prime minister (albeit someone chosen by Mr Berlusconi himself, with Mr Letta or Mr Alfano being the main candidates). The latter will push for the same package of measures presented so far. A broadening of the coalition, however, could find some resistance from the junior coalition party, the Northern league, who is calling for early elections in the event of Berlusconi stepping down. Overall, it should lower the uncertainty and provide a mild positive for the markets. We attach a 30% probability to this scenario.
3) Early elections. The most market negative option in the short-term, in our view, and a sign of incapacity to reach an agreement at the political level. Uncertainty on the outcome of the elections could last for several months, as elections would be called at the earliest in January but possibly as late as March or April. As the chart below shows, it is unclear if the current opposition will win a clear mandate. The President of the Republic will likely try to avoid an early election in all possible ways, in our view. We attach a 30% probability to this scenario.
4) Prime Minister Berlusconi stays on. The current government manages to win back enough MPs to carry on. The program of the government will be verified/certified by the IMF, importing in theory some credibility for the government's actions, if they are indeed in respect of the commitments taken with the EU. We attach a 10% probability to this scenario.
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"with Italy we’re talking about the third-largest government bond market in the world going into a meltdown situation."
Don't stop be- lieven'! Ooo oo Oooo
http://www.businessinsider.com/roubini-the-next-mf-global-collapse-could...
My apologies to the Tyler(s) for linking to businessinsider.... I have no excuse.
The cure?
Print more money. It'll save the banks.
The problem? We'll eventually get a populist crazy-man (men) that will lead the world to war.
Why can't the capitalists figure it out.
Shearing the sheep? OK.
Slaughtering the sheep? It leads to slaughter.
But what the fuck do I know?
http://fucklloydblankfein.blogspot.com
They are not capitalists. They are human beings that will steal if given the opportunity. some people never met an idea that they eventually didn't take a big crap on. I'm not recommending that people shouldn't think, but they should be aware of these predators.
Europe : The Final Countdown
We're leaving together,
But still it's farewell
And maybe we'll come back,
To Euro, who can tell?
I guess there is no one to blame
We're leaving ground
Will things ever be the same again?
It's the final countdown...
We're heading for Default and still we stand tall
Cause maybe they've seen us and welcome us all
With so many light years to go and things to be found
I'm sure that we'll all miss her so
It's the final countdown... ooh!
PS. Original lyrics: Euro=Earth, Default=Venus
They are not Capitalists, they are the oligarchy, the manipulators, the George Soros wing of "Capitalism". The criminal class that arises in every generation and occupation. But you may be pretty right on the populists and war. Thats how we got the anti-freedom FDR and failed socialism of the "New Deal".
What the heck is Italy doing being the thrid largest gubbermint bond market in the world in the first place? Or third place rather? Tiny nation.
Anyways, look at the map, the Boot will just kick the can, so obvious. Right to Spain.
Then the fun begins.
ORI
Axis of Evil
I'm sure your Sonia agrees with you, it's a tiny nation, nothing to write home about
I sometimes wonder if anybody ever visits it or even heard of it
Sonia (Ugh). And yikes to boot. She is a Soviet/Vatican plant from way back when.
But seriously, I can understand Russia, Australia, India....much "larger" nations, being more bond-selly than Italy, no? That is all I was trying to say. And if you are Italian, no apologies from me Ghordius... it's a bit of a Joke, Italy is. As is India, the US, UK, China and the whole of this "Nation-hood" crap.
ORI
Rut Roow
I've just been told it "Ruh-roh!". I could care less, but my dog insisted I point it out. She's become a real spelling nazi since she chewed up that dictionary.
It’s in Italian
BA BA BAAAA! BA BA BA BA BA! BA BA BAAA!
The Northern League as "red", i.e. left? Strange use of colours, in my book they are definitely EuroSkeptics/Right/Fiscal Conservatives...
Fact is that the majority is conservative right (52%) and the progressive left is smaller.
The conservatives splitted in two additional factions, mainly Fini's ex-fascists and an additional ex-Christan-Democrat group.
On a different note, should Berlusconi's gov not fall, and by this winning a 52nd vote of confidence, what is the MSM going to say about it? Scream? Declare Italy as a "failed democracy"? Did they even prepare articles for this eventuality?
You mistakenly assume that anyone takes the MSM seriosly:)
When it comes to Italian Politics, I do have to assume this, since nearly nobody (outside of Italy) ever even acknowledges that there is an electoral supporting base of Berlusconi.
Just read the comments around here - you could think he never won any elections (4) and he never got parliament's vote of confidence (51 times).
I think the mix of sex scandals and politics befuddle the UK/US perceptions - if it would be impossible here it can't be possible in Italy, period.
Italy is ungovernable. Only Silvio can guarentee no early elections. Once Silvio is gone, the gov will revert back to effective 9 month terms> I think it was Churchill who said that one shouldn't pray to hard for anything, let he gets it:)
Italians should start ordering the Greek manual on how to smile while taking it up the ass.
So ... once again we have Europe commanding all the attention.
And ... so it will remain until it falis or ... some other SHF event.
In the mean time ... America's 1%'ers work quietly out of the public eye to do ... what? God's work?
"in a few hours"
right after our election day in the states as well.....
my popcorn has arrived i just want to start eating let the show begin
That SHTF and it ends up as a total clusterfark = 99.99%
http://vegasxau.blogspot.com
Truly strange days we live in where its considered bullish if the world won't implode in the next hour.
You can shuffle the face cards anyway you like....THE DEBT IS STILL THERE AND STILL CANNOT BE PAID BACK.
Does any of this matter? Isn't this all rearranging deck chairs on the Titanic. The most bullish case is that it buys time before Greece implodes...am I wrong?
Planned obsolescence from the light bulb to the bond market.
http://www.youtube.com/watch?v=Y1xt4nEvipg
The worst case scenario from a market perspective remains early election (and the time wasted with it) and a victory of the center-left where the more leftist parties are fundamental to form a government (i.e. a scenario which is going to happen 100% if the center-left wins the election). In this case we can forget any possible reform in line with what ECB/IMF and the market are expecting now.
Priceless advertisement: "Dear Silvio, another chance to get away with Ryanair. Flights from only 9.99 euros"
http://www.ryanair.com/it
'Tis all but a fully managed distraction.
DO NOT look at the USD. repeat: DO NOT look at the USD.
when do we get to vote NO CONFIDENCE in our govt?
eh, though luck, this is only reserved to European Parliaments
and in Germany's case only in a "constructive" no confidence vote
SilverDOG: "DO NOT look at the USD. repeat: DO NOT look at the USD."
Oh God! I LOOKED!!!
http://www.youtube.com/watch?v=rI6-JzxV-_M&feature=related
HD:
BWaaahh haaah haaaa haa!
Perfect.
Still laughing.
Ok, it appears all four scenarios are bullish???? Did I read that right?
This is good for the Euro. Right? Because the more horrible trouble the Euro is involved with, the more stable it appears to maintain. How is this currency at 1.38? What a manipulated joke.
My favorite part...........
"when the 2010 budget review is voted on"
If this is correct, then it is undisputable that "markets" are anything but forward looking.
macro-bunga update.
BOB MARLEY,WHO THE CAP FIT.
http://www.youtube.com/watch?v=uC6UIW1F5Vc
.
ROUBINI: The Next MF Global Collapse Could Be Goldman Sachs
Read more: http://www.businessinsider.com/roubini-the-next-mf-global-collapse-could...
.
Topless in Vatican: FEMEN strip against ‘Catholic witch-hunt’
http://maxkeiser.com/2011/11/07/topless-in-vatican-femen-strip-against-c...
.
Wall Street v. Greece: G20 Opens as Greek PM Pushes For Referendum on EU Bailout Plan
http://www.youtube.com/watch?v=7t1WmqOb6u4&feature=player_embedded
.
"Such is the irresistible nature of truth that all it asks, and all it wants, is the liberty of appearing." - Thomas Paine
===
Number Of Iraqis Slaughtered In US War And Occupation Of Iraq "1,455,590"
Number of U.S. Military Personnel Sacrificed (Officially acknowledged) In America's War On Iraq: 4,801
www.icasualties.org/oif/
Number Of International Occupation Force Troops Slaughtered In Afghanistan : 2,793
=
Cost of War in Iraq & Afghanistan
Total Cost of Wars Since 2001
$1,273,642,760,121
http://www.costofwar.com/