Submitted by Mish Shedlock of MishTalk
Four new polls show comedian Beppe Grillo’s Five Star Movement (M5S) ahead of prime minister Matteo Renzi’s Democratic Party (PD) were an election held today.
The next election will be no later than May 23, 2018. Renzi promised to step down if he fails a constitutional reform referendum later this year.
The reform referendum will likely be held no later than this October.
Beppe Grillo – Comedian Founder of Five Star Movement
Renzi Rocked Yet Again
Please consider Renzi Rocked as Five Star Surges in Polls.
The populist Five Star Movement has emerged as Italy’s leading political party, overtaking Matteo Renzi’s ruling Democratic party (PD) in four separate opinion polls that have exposed the growing vulnerability of the country’s centre-left prime minister.
The primacy of the Five Star Movement, which is led by the sardonic comedian Beppe Grillo and has called for a referendum on ditching the euro, reflects a shift in public opinion against Mr Renzi that will heighten fears of a return to political instability and uncertainty in the single currency’s third largest economy.
“A government collapse is more than just a possibility, it is a scenario that we are looking at very closely,” said Federico Santi, an analyst at the Eurasia Group consultancy. “The trend has been clearly bad for the ruling party and favourable to the Five Star Movement, driven by issues — like migration, the banking troubles and corruption scandals — that are not going to go away. It’s hard to see what it could take for Renzi and the PD to make a comeback at this point.”
According to polls released on Wednesday by Ipsos, the Five Star Movement is supported by 30.6 per cent of Italians, compared with 29.8 per cent for the PD. Similar polls in January had Mr Renzi’s party leading the Five Star Movement by nearly six percentage points. In the 2014 European elections, shortly after Mr Renzi took office, the PD defeated the Five Star Movement by nearly 20 percentage points.
Three other surveys taken after the Brexit vote also showed the Five Star Movement ahead, with the next national elections due in early 2018.
One by Demos released on July 1 showed the party ahead by a margin of 32.3 per cent to 30.2 per cent over Mr Renzi’s PD. Others by Euromedia and EMG showed the Five Star Movement with narrower leads of 0.5 and 0.4 percentage points. Another poll showed the Democratic party hanging on to a narrow lead.
The polls look even darker for Mr Renzi if the likelihood of a run-off between the two largest parties — which is called for under Italy’s new electoral law if no party exceeds 40 per cent — is taken into account. In those scenarios, the Five Star Movement would defeat the PD by as much as ten percentage points, as right-wing voters would coalesce around the protest party.
Beneath the surface, there is increasing talk of what might happen should his efforts fail. Most likely, said Mr Santi, a technocratic government would have to take charge, rather than a quick move to fresh elections. But no clear candidate has yet emerged who would take the reins.
Credibility of the Italian Political Class at Stake.
Renzi asked voters to stick with him and promised an aggressive campaign in favor of the referendum.
His rationale is laughable: “The referendum is not crucial for the destiny of an individual, but for the future credibility of the Italian political class,” said Renzi.
Are voters really supposed to rally around the notion of saving the credibility of the ruling political class?
Wow! The statement is so ridiculous one has to wonder if Renzi secretly wants the referendum defeated.
40% the New Majority
The referendum would shrink the Italian senate and give a majority of parliament to any political party that could achieve 40% of the vote in national elections.
If no party achieved 40%, a runoff would take place and the winner would automatically receive a majority of parliament.
Curiously, M5S is against this reform although it may the best way for Grillo to get the vote he seeks on leaving the Euro.
Renzi Stung in Mayoral Elections
In recent mayoral elections Renzi’s party went down in defeat in in Rome, Turin, Naples and Trieste. Rome and Turin went to the Five Star Movement.
For mayoral details and details of the constitutional referendum, please see Stinging Defeat of Renzi in Italian Mayoral Elections; 40% the Proposed New Majority
Italian Banking System Near Collapse
Monte dei Paschi, the oldest bank in the world, and Italy’s third largest is so woefully undercapitalized that even the ECB recognizes that fact.
On July 4, I commented the ECB Triggers Another Bank Shares Selloff, Tells Monte dei Paschi to Shed More Assets.
German Chancellor Angela Merkel and the ECB are at odds with Renzi over how to fix €360 billion in nonperforming loans in the Italian banking system.
Merkel rebuffed Renzi’s request for state sponsored bank bailouts on four occasions.
On June 30, I asked Italy’s Zombie Banks on Death Bed, Bail-Ins Coming?
Merkel chastised Renzi, “We wrote the rules for the credit system, we cannot change them every two years.”
Under a bail-in scheme bondholders and depositors will take a huge hit. Voters are already angry over the bail-in of bondholder of much smaller Banca Etruria last December.
In Italy, individual investors own close to €200 billion in Italian bank bonds. Imagine the anger should they lose even a portion of their investments.
Italy on the Euro
What has the Euro done for Germany vs. Italy?
Voters Hold the Key
Yesterday I asked Can the EU Survive as a Prison? Who Has the Keys?
The short answer is voters hold the key, and they are already mad as hell. If bail-ins happen, it will be the end of the Renzi government for sure.
Renzi Slams Deutsche Bank
ZeroHedge has an excellent article out today on the state of Deutsche Bank through the eyes of Renzi.
In a surprising admission of reality, none other than Italy’s prime minister Matteo Renzi, “went there” and slammed Deutsche Bank as the true “derivative problem” facing Europe.
As Reuters adds, speaking at a joint news conference with Swedish Prime Minister Stefan Lofven, Renzi said other European banks had much bigger problems than their Italian counterparts.
“If this non-performing loan problem is worth one, the question of derivatives at other banks, at big banks, is worth one hundred. This is the ratio: one to one hundred,” Renzi said
So just like that the Mutually Assured Destruction doctrine is activated, because now that Deutsche Bank’s dirty laundry has been exposed for all to see, Renzi’s gambit is clear: if Merkel does not relent on bailing out Italian banks, the collapse of Italian banks will assure the failure of Deutsche Bank in kind.
This kind of insanity is precisely why the euro is doomed.
Get Out Now!
I repeat my warning from last December: Get Your Money Out of Italian Banks Now!