Odd Couple Fails
Italy’s “odd couple” government, an alliance between Left-wing M5S party and the Right-Wing League party collapsed today.
The collapse was long in the making as the only thing the parties had in common was an anti-immigration stance. At the time the coalition formed, the Five Star Movement (M5S) was the senior party with the League (previously the Northern League) as the junior party.
The League now dominates the polls. The collapse was triggered last week when the 5 Star Movement (M5S), Salvini’s coalition partner, attempted to derail a high-speed rail link that the League (Lega) wanted.
The collapse became official today with the resignation of Giuseppe Conte, the compromise Prime Minister. Neither the leader of M5S nor the League held the highest office.
Italian Prime Minister to Resign, Declaring End of Coalition
Please consider Italian Prime Minister to Resign, Declaring End of Coalition
Prime Minister Giuseppe Conte announced his resignation in a speech to the Senate on Tuesday, blaming far-right Interior Minister Matteo Salvini for causing a political crisis as Italy looks to draw up a challenging budget to keep its parlous finances on track.
Mr. Salvini, a rising political force from Europe’s insurgent far-right, began pressing for snap elections on Aug. 8, in a bid to capitalize on opinion polls that show his nativist League has become Italy’s most popular party, with around 36% support. The League has served as the junior coalition partner of the populist 5 Star Movement since summer 2018.
Leaders of 5 Star are exploring the only plausible alternative to snap elections the League would likely win: a new coalition government with their longstanding foes, the mainstream center-left Democratic Party. Talks in coming days could show whether such a coalition is possible or early elections are needed.
Italy’s power struggle is a symptom of Europe’s continuing political upheaval after a decade of crises including the economic depression in the periphery of the eurozone and the pressures of rising immigration from poor and war-torn parts of Africa and the Middle East.
Mr. Conte, a nonparty premier close to 5 Star, attacked Mr. Salvini for undermining the government in which Mr. Salvini has served as interior minister since June 2018. Mr. Salvini said on Aug. 8 that he wanted to “ask the Italians if they want to give me full powers.” Some critics pointed out that Italian Fascist leader Benito Mussolini used a similar phrase to demand power in 1922.
“We don’t need people with full powers, but people with a culture of (respect for) institutions and a sense of responsibility,” Mr. Conte told the Senate on Tuesday. He accused Mr. Salvini of putting personal and party interests ahead of the country’s needs and of lacking respect for Italy’s constitution.
“We are the only supposed fascists who want a vote,” Mr. Salvini replied.
What’s Next?
In the last election, M5S ran on a platform against he mainstream center-left Democratic Party (PD Partito Democratico).
Now, M5S needs to enter a coalition with PD if it wants to stop an early election.
That’s another coalition that cannot possibly last, assuming it gets off the ground in the first place.
But will it?
Bond Yields Say “Expect a New Coalition”
The reaction of the bond market is telling. It welcomes the collapse of the current coalition, clearly expecting M5S and PD to join forces.
But let’s explore “what if?” starting with a look at the polls.
Italian Election Polls
It’s possible the bounce in M5S is a resulst of actions by Salvini but I discount that possibility.
Why?
Look at the Gpf poll on July 15-18: same polling firm same result.
All the other polls with eight different polling firms all suggest something else. It’s highly likely the League has between 35% and 38% of the vote with M5S about 17% to 18% of the vote.
What If Elections?
It’s not precisely clear what would happen if there were elections now.
Why?
By Italian elections rules, coalitions take precedence over parties. Thus if M5S and PD formed a coalition it could command a huge majority of the seats. If not, the League would win.
Salvini’s Gamble
It’s one thing for M5S and PD to join a caretaker government now as opposed to them entering an official coalition for the next election.
That is Salvini’s gamble.
He bets such a coalition will not form or it will quickly collapse if it does form.
Critical Juncture
If there is another election and Salvini wins, a eurosceptic, anti-EU, anti-immigration politician will become the leader of the third largest country in the Eurozone.
Mini-Bot Parallel Currency
Recall that Salvini proposed a “Mini-Bot” parallel currency and also note that Italy is in huge defiance of EU spending rules.
On June 18, I wrote Meet the Mini-BOT: Italy Will Break Up the Eurozone.
Today, the Italian 10-year bond movement discounts that possibility. But sooner or later the mini-bot and Salvini will return in a major way, perhaps within weeks.
Mike “Mish” Shedlock
Is the ECB’s balance sheet really full of Italian bonds? It has been suggested that it has, but is it really?
If not, who the heck is buying Italian bonds at such low yields when there is every possibility that a new party in power might seek to leave the Euro?
Trump steps it in again by calling any Jews who don’t vote for him disloyal. Some guy named Hitler persecuted people who didn’t vote him. Trump keeps making his bad situation worse. Texas is now a tossup state.
“The very pro-establishment president will make sure it happens.”
Just like they would ensure Salvini would never be in bed with M5S?Just like PD could not possibly lose? Just like Brexit could never happen? Just like Trump could never get elected?
Just like those?
ECB is likely to flood the system & that have more impact one way or another.
“Don’t even know why this is even a headline.”
Either please think or please read. I don’t care which, but do at least one.
A eurosceptic, anti-EU, anti-immigration politician is poised to become the leader of the third largest country in the Eurozone.
This would be a first.
Those who can neither read nor think dismiss the headline.
It will be a hard slog. Polls don’t count, elections do. According to the last election result M5S(32.22)+PD(18.9) could form a majority. The very pro-establishment president will make sure it happens.
“The very pro-establishment president will make sure it happens.”
Just like they would ensure Salvini would never be in bed with M5S?Just like PD could not possibly lose? Just like Brexit could never happen? Just like Trump could never get elected?
Just like those?
Who can be surprised when Bannon has been spending most of his time in Italy destabilizing the EU further. Bannon is still in search for his holy grail for forming a hard right government that works for the people but Italy isnt it. People dont like to work enough there to be self sufficient.
The interesting thing is that both in Italy and in Britain the reason for having issues are similar — Immigration. However, Britain’s immigration is rather different than that if Italy, with generally better formation (think of the Polish plumbers…). The other issues are very different because the UK was not part of the Euro, and has had generally strong banks (unlike Italy), and stable governments (also unlike Italy).
But the strongest features of both government was their anti-immigration stance, and that is interesting and troubling since it indicates a deeper “malaise” that is clearly not been addressed by their past government.
That’s the issue not being discussed — What has made anti-immigration force so strong (there is nothing new with anti-immigration rhetorics, think the Irish in the US), but the shift in political classes, the desire to respond to these baser instincts is a relatively new outcome.
BTW I have no idea as to why this shift is occurring, I’m just observing
Italy has had something like 63 governments in the last 62 years.
Don’t even know why this is even a headline.
Crickets.