Italy Votes for Chaos and the Euro Crisis Is Back
February 26, 2013 1 Comment
Italy’s parliamentary election could not have gone worse for the country or the euro area.
It is now possible that in the coming months the currency zone’s third-largest economy will need a bailout from international creditors, at a time when Italy will have no government in place to ask for, or negotiate, a rescue. In case you had any doubts, the euro-area crisis is back.
As has so often been the case in Italy, the political gridlock has come in the Senate. Neither Pier Luigi Bersani’s center-left coalition, nor the center-right led by Silvio Berlusconi managed to win a majority, in a political system where a government needs the support of both houses in order to get anything done.
Even more worrisome, Beppe Grillo’s Five Star Movement, which has called for a referendum on whether Italy should keep the euro, has emerged as a major political force with a quarter of the vote.
Most observers had expected a partnership between Bersani’s Democratic Party — which scraped a win in the lower house — and Prime Minister Mario Monti’s centrists to get a majority in the Senate. But Monti scored just 10.6 percent of the vote, while Berlusconi and Grillo did better than expected in regions that are key to winning the Senate.
To read the rest, please see the original piece on Bloomberg View.