The Italian elections are technically over but also technically still taking place and I figured I owe it to my rather accurate prediction a year and a half ago to come up with some sort of response/prediction hybrid to try and put things in perspective. Here are some key points I see as having a significant impact on Italy and the rest of Europe.
Whoever wins will not fix the struggles of Italians
It does not matter whether Bersani or Berlusconi win or at least get a majority coalition formed in this election because neither has made promises to help the struggling Italian. The former simply does not have the capacity or political capital to reduce the IMU on those who struggle to keep even their one and only house they own, while the latter wants to reduce the IMU by supposedly trimming state spending by 2% a year.
The fact of the matter is the IMU tax should have been a great way of addressing two major issues in Italian state economics; unfair taxing practices and fiscal evasion. The IMU should have been a way to tax second or third homes (albeit have the acronym changed, but I digress) owned by those who can afford more than one house, theoretically the very well off as opposed to taxing everybody, including those least well off who still hung onto their one and only home. At the same time, the IMU would have acted as a litmus test to see who was actually paying taxes on their second and/or third homes. Tax evasion is a big problem in general but in Italy it goes beyond the revenue problem and becomes instead and issue of fairness on the part of the government.
The IMU should have been a real arrow in the quiver of a state struggling for approval and trust on the part of the Italian people, and instead it turned into a farce. Whoever wins will not just ignore the good bits of an extended property tax, but in doing so will continue to ignore the real problem of the majority of Italians struggling with work and payments.
Whoever wins will not be liked by Angela Merkel
Let's be honest, Monti will not be making a repeat appearance in a new government. Although it was Berlusconi who pulled the rug out from underneath him, Monti never caught the public as he should have as a leader, technocratic or not, so he most likely will have to force his way into a coalition if he wants to remain politically relevant. That being said Monti really is the only candidate that Europe approves of, if only because his policies are free-market oriented and therefore entice more investor confidence than other candidates.
If Bersani does come out on top, his communist roots may dissuade some from giving him the benefit of the doubt, but do keep in mind that the Communist Party did not join the PD coalition, but instead joined Ingroia's newly formed coalition. This really should come as no surprise given the fact that the PD has proven in recent months to be as "directly involved" with free-market banking as any real Italian political party should be. The Monte Paschi conspiracy isn't a good sign however, given the fragility of finance in Italy, meaning that should the whole of the PD be as disinterested with accounting for risk as they were with a single bank, it could mean more trouble.
But certainly no candidate other than Berlusconi truly creates such a negative effect to Italo-German relations. Eliminate the sexism and the girth-jokes thought to be the toast of the party at bunga-bungas of the past, Angela Merkel cannot possibly want to deal with Berlusconi again after his eccentricity nearly pushed Italy off the Euro and Germany with it. Considering also that the spread seems to be positively related to Berlusconi's being in office, he simply carries too much baggage to deal with by any German chancellor.
Whichever party wins will have a tough time finding legitimacy in Parliament
The nature of the Italian government is such that coalitions must exist given the vast number of big-ticket special interests that fall everywhere along the left-right political spectrum. As this election has shown, there are three major groups of Italians; ones that find themselves to be alright at the current stage but can see room for improvement (PD voters), ones that morally live in the 18th century and would rather not pay any taxes (PDL voters), and ones that are sick and fed up of it all (Five Star voters). Unfortunately because these three groups almost evenly split the ballot, it means that Grillo's party holds the coalition tie-breaker. This is particularly frustrating when you add in the fact that Grillo has repeatedly said that he does not want to create a coalition, because that is the old way of doing things.
The fact of the matter is he will be forced to join a coalition because it is the only way a secondary vote can be avoided and the real way to make the PDL (the greater evil between the PD and PDL in Grillo's opinion) go away for a while. What that in effect means is that there will be a leftist-ish government in charge where half of the members think the other half is unprincipled and as dirty as the politically opposing party. Sound familiar? It should.
Grillo's Five Star party does sound good on paper, but it is inherently anti-government just like the Tea-Party in the United States, and we all have seen what Tea-Party representatives have done to the functionality of the American Congress. God only knows what sort of dysfunction awaits should Grillo be begrudgingly forced into a coalition for the sake of taking power away from Berlusconi and the PDL. If this does become a problem, and there is a rift in the Parliament and the whole government for that matter, we could be looking at another dissolution, perhaps sometime around the next big market scare if there is one.
Is there anything good that can come out of this election?
I think that it's become easier and easier to be cynical about political prospects in Italy, if only because the negativity of it all has entered a predictable phase of feigned disinterest of political ambitions from the right only to have them come swooping back in with a solution to pent up social issues they will blame the left for. The fact of the matter is there is some hope in all this after all.
Let's assume Grillo decides to enter into a coalition with Bersani, and let's assume they don't hate each-other enough to have the coalition implode on itself. That could happen. Bersani just yesterday announced intention to open up the gates of the PD to Grillo, even though the PD had won the most votes outright. This could be enough for Grillo to seriously consider asking for and importantly receiving most of his party's proposals to be accepted and integrated into the PD platform.
That all depends however on how much people would not want to see Berlusconi get close to being in power again. If anything, this potential Bersani-Grillo partnership could finally answer the question as to whether or not Italians are able to put their political shadows to rest. If they beg for Grillo to join a coalition or at the very least forgive him for it, then they will be taking a step in the positive direction. If instead the political party remains bigger than the objective of running the country, then it will be a step in the other direction.
Whoever wins will not fix the struggles of Italians
It does not matter whether Bersani or Berlusconi win or at least get a majority coalition formed in this election because neither has made promises to help the struggling Italian. The former simply does not have the capacity or political capital to reduce the IMU on those who struggle to keep even their one and only house they own, while the latter wants to reduce the IMU by supposedly trimming state spending by 2% a year.
The fact of the matter is the IMU tax should have been a great way of addressing two major issues in Italian state economics; unfair taxing practices and fiscal evasion. The IMU should have been a way to tax second or third homes (albeit have the acronym changed, but I digress) owned by those who can afford more than one house, theoretically the very well off as opposed to taxing everybody, including those least well off who still hung onto their one and only home. At the same time, the IMU would have acted as a litmus test to see who was actually paying taxes on their second and/or third homes. Tax evasion is a big problem in general but in Italy it goes beyond the revenue problem and becomes instead and issue of fairness on the part of the government.
The IMU should have been a real arrow in the quiver of a state struggling for approval and trust on the part of the Italian people, and instead it turned into a farce. Whoever wins will not just ignore the good bits of an extended property tax, but in doing so will continue to ignore the real problem of the majority of Italians struggling with work and payments.
Whoever wins will not be liked by Angela Merkel
Let's be honest, Monti will not be making a repeat appearance in a new government. Although it was Berlusconi who pulled the rug out from underneath him, Monti never caught the public as he should have as a leader, technocratic or not, so he most likely will have to force his way into a coalition if he wants to remain politically relevant. That being said Monti really is the only candidate that Europe approves of, if only because his policies are free-market oriented and therefore entice more investor confidence than other candidates.
If Bersani does come out on top, his communist roots may dissuade some from giving him the benefit of the doubt, but do keep in mind that the Communist Party did not join the PD coalition, but instead joined Ingroia's newly formed coalition. This really should come as no surprise given the fact that the PD has proven in recent months to be as "directly involved" with free-market banking as any real Italian political party should be. The Monte Paschi conspiracy isn't a good sign however, given the fragility of finance in Italy, meaning that should the whole of the PD be as disinterested with accounting for risk as they were with a single bank, it could mean more trouble.
But certainly no candidate other than Berlusconi truly creates such a negative effect to Italo-German relations. Eliminate the sexism and the girth-jokes thought to be the toast of the party at bunga-bungas of the past, Angela Merkel cannot possibly want to deal with Berlusconi again after his eccentricity nearly pushed Italy off the Euro and Germany with it. Considering also that the spread seems to be positively related to Berlusconi's being in office, he simply carries too much baggage to deal with by any German chancellor.
Whichever party wins will have a tough time finding legitimacy in Parliament
The nature of the Italian government is such that coalitions must exist given the vast number of big-ticket special interests that fall everywhere along the left-right political spectrum. As this election has shown, there are three major groups of Italians; ones that find themselves to be alright at the current stage but can see room for improvement (PD voters), ones that morally live in the 18th century and would rather not pay any taxes (PDL voters), and ones that are sick and fed up of it all (Five Star voters). Unfortunately because these three groups almost evenly split the ballot, it means that Grillo's party holds the coalition tie-breaker. This is particularly frustrating when you add in the fact that Grillo has repeatedly said that he does not want to create a coalition, because that is the old way of doing things.
The fact of the matter is he will be forced to join a coalition because it is the only way a secondary vote can be avoided and the real way to make the PDL (the greater evil between the PD and PDL in Grillo's opinion) go away for a while. What that in effect means is that there will be a leftist-ish government in charge where half of the members think the other half is unprincipled and as dirty as the politically opposing party. Sound familiar? It should.
Grillo's Five Star party does sound good on paper, but it is inherently anti-government just like the Tea-Party in the United States, and we all have seen what Tea-Party representatives have done to the functionality of the American Congress. God only knows what sort of dysfunction awaits should Grillo be begrudgingly forced into a coalition for the sake of taking power away from Berlusconi and the PDL. If this does become a problem, and there is a rift in the Parliament and the whole government for that matter, we could be looking at another dissolution, perhaps sometime around the next big market scare if there is one.
Is there anything good that can come out of this election?
I think that it's become easier and easier to be cynical about political prospects in Italy, if only because the negativity of it all has entered a predictable phase of feigned disinterest of political ambitions from the right only to have them come swooping back in with a solution to pent up social issues they will blame the left for. The fact of the matter is there is some hope in all this after all.
Let's assume Grillo decides to enter into a coalition with Bersani, and let's assume they don't hate each-other enough to have the coalition implode on itself. That could happen. Bersani just yesterday announced intention to open up the gates of the PD to Grillo, even though the PD had won the most votes outright. This could be enough for Grillo to seriously consider asking for and importantly receiving most of his party's proposals to be accepted and integrated into the PD platform.
That all depends however on how much people would not want to see Berlusconi get close to being in power again. If anything, this potential Bersani-Grillo partnership could finally answer the question as to whether or not Italians are able to put their political shadows to rest. If they beg for Grillo to join a coalition or at the very least forgive him for it, then they will be taking a step in the positive direction. If instead the political party remains bigger than the objective of running the country, then it will be a step in the other direction.
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