This morning Eurointelligence stated “Lega is going back to the coalition with Silvio Berlusconi.”
I strongly questioned that idea yesterday and again today. My rationale was then and remains now: Lega cannot trust Berlusconi.
Reader “AC” from Italy pinged me a bit ago with this viewpoint:
Hi Mish,
Many observers believe that Lega will put such strict conditions that Berlusconi will not accept to be in a coalition with them.
Most likely, Lega and Five Star will not enter a coalition agreement but instead will implement a tactical “give-up”.
By that I mean they will not push hard for their candidate in places where the other party has bigger chance to win. Such a strategy would maximise their reciprocal outcome in the next election.
I believe these observers and commentators are right, this is the likely coming strategy of these parties.
Best regards
AC
Grave Consequences
Yesterday, in Grave Consequences: Italy Bond Yields Soar, Protests Called, Euro Referendum, I commented:
Rules of the Game
If possible, and I think it is, the Northern League could drop out of a coalition with Berlusconi and create one directly with Five Star or more likely, with no one at all.
The new math them would look like this: 22 + 35!
Lega and Five Star would have a 57% outright majority.
At a minimum, Mattarella’s game playing will rally Five Star and Lega supporters, while other parties may decide to sit this out.
Don’t Rule This Out
Five Star and the Northern League proved they can form a coalition, and it can happen again with an even bigger majority if Lega cancels its coalition with Berlusconi.
Recall my March 1 post, three days ahead of the election: Italy Election March 4: Consider a Surprise M5S + NL Alliance.
I have not heard anyone discuss this new scenario, as everyone is still focused on the center-right even though Savini has no reason to trust Berlusconi.
That’s the political dice game Mattarella is playing. One way or another, the dice are loaded against Mattarella.
Majority Math
Reader AC commented on the “40% majority” viewpoint.
There is not a specific rule that says that with 40% you will have a majority. Rather, 40% is an estimation of the level needed to reach majority based on the electoral law.
Representation is a mix of seats elected in “uninominal” mode , a relatively small portion of Parliament where one member of the legislature is selected from each electoral district, and larger proportional total.
The proportional part is based on lists: based on the “proportion” of votes of each list (coalition or if you are just a party like 5S, the party itself), the list gets a certain number of candidates (from the first of the list downwards). Such areas are bigger and number of seats for these areas is much higher than uninominal.
Proportions are coalition-based so being in a coalition may facilitate getting seats.
The combination of all this makes that when you reach 40% at national level you are almost sure of getting majority of seats, unless some strange combinations. When you go much higher than 40% your majority in Parliament can become overwhelming.
Let’s take a look at the revised math based on the latest Italian Polls.
Revised Math
Election Law Irony
The Italian Parliament revised the election rules specifically to keep Five Star out of government. That plan backfired miserably.
Center-Right Math
Lega plus Forza Italia (FI’s Silvio Berlusconi) only poll at 35.5%.
However, the Center-Right coalition currently looks like this:
That coalition, if it held, barely totals 40% at the moment.
Given that Berlusconi is a highly unreliable partner and prone to switching his mind and making demands, why would Salvini even want to bother?
If Five Star formed an official coalition with Lega, their majority would be massive. Even without doing so, they rate to get 57% according to the latest poll.
The one fly Lega in the go-it-alone thesis is the door would then be open to an obscure FI + PD coalition gathering around 27% at the moment, potentially ahead of Lega.
But recall “ACs” suggestion of a cooperative-alliance rather than an official one.
Also, might Lega decide to enter a “Center-Right” coalition excluding Berlusconi?
Once again, I do not know the official rules. I will see if I can get an answer to that question from AC.
Mike “Mish” Shedlock
Correct, I meant converting back to the Lira from their Euro.
Please read this as it’s so close to the mark it’s scary – it’s long – but worth it. The EU is anti-democratic and corporatist.
You need to realise that there is no provision in EU law that outlines a process for reversion to the old currency — nobody even countenanced the possibility! If there was, the legal aspects would be less of a minefield.
The IT is fairly basic (I would imagine). It’s the logistics that is the issue. I began my banking career a couple of years ahead of the switch from national currencies into the Euro. The issues surround contracts (including derivatives) and that is a mess of monumental proportions — not just logistics, the legal ramifications would be off the dial and potentially run for years (or decades). Oh to be a lawyer …
My take is, LN and 5Stars are going back to negotiate with the President and will form a new government. Salvini will try to get some other from the Center-Right as he feels uncomfortable being alone with 5Stars.Maybe Berlusconi has expired, but he still controls the Media that created Forza Italia from thin air in a couple of years. He has a big ego, he feels wounded and he will to whatever it takes to take his revenge over time, slowly, smartly. Media will start fearmongering, telling some truth for once, ie that the Government politics might have dire consequencies and exiting the Euro could bankrupt banks, destroy savings and cut deeply the purchasing power of wages and pensions. Given some time, there is nothing so powerful as fear in shaping public opinion. FI could also try to play the role of the reliable partner in EU supporting Macron in a push to reform. Germany should give a close look to some numbers, there are no more good options for them but maybe that Eurobonds are the lesser evil now. The trade deficit of Italy towards Germany had to be financed by a flow of capital into Italian debt. German banks bought a lot of private Italian debt than can become toxic for them. We will see, there are many many options.
ECB will be used to pressure Italy, Oettinger has apologised (the a-hole) and Soros pushing for a re-vote in the UK. We soon get to see the lengths they will go to to keep it on the road. Germans are turning against Italy that is now taking the place Greece held
do you mean “from” the euro as opposed to “back to the EU?
If so, I think it would be very complicated and messy.
Mish, I’m curious to hear your thoughts on how difficult it would be for Banks to convert their payment system back to the EU. Yves Smith over at Naked Capitalist continually states it is an extremely complex IT project. As an IT services professional, I don’t think it is nearly as difficulty as it was 18 years ago when Italy converted to EU.
Apparently it’s sweeps week at Themaven…
With regards to the picture at the top of this post, I have only one word to say….
S’facim!