Yesterday it was headlines from Bini-Smaghi and Weidmann punching the lights out for the Euro (which as we have been saying all along, needs to be lower not higher to promote some glimmer of hope for Europe). Moments ago it was two new headlines, which if not market crushing on their own, show how increasingly precarious Europe is.
- ITALY PARLIAMENT FAILS TO ELECT PRESIDENT IN FIRST BALLOT
- MERKEL FALLS SHORT OF COALITION MAJORITY ON CYPRUS VOTE
In other words, despite hopes that the Italian political chaos would stabilize following a compromise presidential candidate (which we noted earlier today we would believe when we saw), Italy continues to be an ungovernable chaos. As for Germany, Merkel was forced to rely on opposition votes to pass the critical Cyprus rescue package on which she has literally bet the future of Germany and her political career. While not unexpected, this portends poorly for the Chancellor's September reelection chances, especially if the German anti-Euro party continues its recent surge in popularity in the past few weeks.
Bloomberg has the breakdown:
- Chancellor Merkel gained 303 votes from her own coalition lawmakers in a vote today to approve aid for Cyprus, fewer than needed to secure their own simple majority in the 620-seat lower house of parliament, the chamber’s press office said in an e-mailed statement.
- 220 CDU-CSU lawmakers backed the aid program of EU9b while 10 rejected the packge; 83 FDP lawmakers backed the move and 8 rejected it, meaning Merkel depended on opposition parties to get the package approved
EUR reaction is swift, although it may be discounting the amount of "political capital" invested...
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