Tag Archives: Italian elections

Comments on the Italian election results

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With austerity now well understood to increase deficits, only PSI remains to decrease deficits. With strong political support surfacing, as per Grillo’s positions on repudiating debt.

So there is the deflationary impact of PSI. The flight to maybe actual cash even at the institutional level to avoid PSI. Portfolio shifts out of the euro, no bid for anything but bunds until they too threaten PSI which would be down the road as German exports to other members fade and their deficit rises as well.

The answer is ECB guaranteed funding and deficit limits hiked to at least 8% of GDP for all members. The problem is there is no political channel to get from here to there?

Exports, domestic credit expansion, and fiscal policy are all going the wrong way.

The remaining question is how much the population can take before it snaps?

All the talk about shorting US Treasury securities and JGB’s looks to have been a bit premature…
;)

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OpenEurope: What Happens Next in Italy?

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The Grillo factor

Beppe Grillos Five Star Movement received over 25% of the vote exceeding all expectations. Though Berlusconi and Grillo are both populist and anti-austerity, in many ways, theyre also each others antithesis one representing the old sclerotic system, the other a new, impulsive anti-establishment future. Grillo is clearly a new breed in Italian politics. He has been very critical of Italys euro membership, and wants a referendum to decide whether the country should leave the single currency. Hes also suggested that Italy should consider refusing to pay back at least part of its huge public debt.

As previously discussed, the PSI has irresistible political appeal?

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