Surprise!
- *BERSANI TOLD ITALY PRESIDENT HE CAN'T FORM GOVT
- *BERSANI SAYS HE FACED UNACCEPTABLE PRECONDITIONS FROM PARTIES
and so,
- *BERSANI: NAPOLITANO WILL CONTINUE TO EVALUATE POSSIBLE OPTIONS
Leaving the door open for the possibility of a 'caretaker' or technocrat government but most likely - new elections (and given the increased support for Grillo, this could be yet another storm in a teacup for the US markets to shrug off).
While this scenario was an absolutely certain outcome, here are the possible next steps via OpenEurope [3]:
Bersani throws in the towel and hands his mandate back to President Napolitano
This wouldn't automatically mean new elections - which, in any case, can only be called by the new Italian President when he enters office in mid-May. Napolitano would have to start a new round of talks and then decide what to do. As we explained in previous blog posts, the most likely outcome would be the Italian President proposing a temporary 'national unity government'.
The new cabinet would be led by someone from outside of 'traditional' party politics (the word 'technocrat' seems to have gone out of favour in Italy these days) - but the ministers could indeed come from political parties. It is unclear whether Berlusconi's party would grant its support, but this solution may have some chances of winning the Five-Star Movement's backing. This 'national unity government' would pursue a clearly limited agenda, and pave the way for early elections - perhaps as early as next year, but with a new electoral law.
It's all very much up in the air in Italy at the moment, but in case of a definitive breakdown of talks everyone will suddenly be reminded of which country should be the eurozone's real concern.
Sadly, not with GETCO's no-volume levitation algos now left in charge of the "market", "everyone" is more likely "no one."