When it comes to Italy, the market may have priced in every possible favorable outcome (the ECB and Kuroda will take care of the rest), but the country still has no Prime Minister and its economy continues to be in freefall with record unemployment and ever higher bank non-performing loans month after month. And while it may have elected a new figurehead president after 6 attempts last week, the choice of Prime Minister will hardly be as simple, especially since as we learned moments ago, the mandate to form a government was just given by president Napolitano to Enrico Letta, deputy of the Democratic Party (which as a reminder is in complete chaos following last week's internal coup and the resignation of its head Bersani over the weekend), at a time when Berlusconi's PDL lead in the polls continues to increase. Why the Bunga veteran would agree to a premiership by his opponents remains unclear, and with a parliamentary vote coming, it is doubtful just how smooth the approval process will be in a country best known for its dysfunctioning political process.
[6]
From the WSJ [7]:
Italy's President Giorgio Napolitano summoned Enrico Letta, deputy of the center-left Democratic Party, to a meeting at the president's palace—the first step to naming Mr. Letta prime minister of a new Italian government.
Mr. Napolitano, who was re-elected on Saturday, said this week that he would move quickly to name someone who could run a bipartisan government in the hope of ending a two-month political impasse and setting the country on course for reforms, including changing a dysfunctional electoral law. Mr. Letta is due to see Mr. Napolitano at 12:30 local time.
If, as expected, Mr. Letta is asked to form a new government, he would then proceed to naming his cabinet ministers, and the new administration would have to then win confidence votes in parliament before starting its tenure. If his government were confirmed by parliament, Mr. Letta—who is 46 years old—would become one of the youngest leaders in Europe.
What makes things especially complicated, is that according to the latest Ipsos poll, it is the PDL that should get the PM mandate according to popularity, something Berlusconi is keenly aware of:
- Centre-right 34.7% (PDL 28.2%),
- Centre-left 29% (PD 24.7%),
- M5S 24.1%,
- Monti/centre 8.9%
Adding insult to injury, Letta is an "anti-austerian", saying austerity measures are no longer sufficient to help with the crisis, which means if he is elected, he and Merkel (and of course Schaeuble) will clash head on, as he picks up the baton where Berlusconi left off in November 2011 - hardly a prescription for a happy ending.
So watch this space: if the vote for Letta is not as smooth as the market anticipates (and this one can't be blamed on the winter weather), expect a prompt return to completely chaotic baseline, which if Belgium is any indication, may just be the best possible outcome for Italy.
Finally, we are confident some may be interested to note that since 2004, Letta has been a Vice-Chairman of the Aspen Institute Italy [8]. The Aspen Institute, of course, is affiliated with the CFT, and the Bilderberg Group.
In other words, instead of a Goldman technocrat, Italy is about to be headed by a globalist technocrat. Out of the frying pan...