Hi Mish,
Italian elections will take place this weekend.
A hung Parliament is likely. This is due to the highly fractionated political landscape in conjunction with electoral law that favors such an outcome.
In the Chamber of Deputies (the lower house of Italy's parliament) voting rules give extra seats to the largest party by popular vote. Senate seats (the upper house) are allocated on a regional basis.
Chamber of Deputies Analysis
- The Center-Left coalition (Bersani) is losing steam but will likely end up with the highest percentage of votes.
- The Center-Right (Berlusconi) is recovering strongly and cannot be entirely discounted.
- Monti's center coalition will likely score poorly, between at 10 and 13%.
- Rivoluzione Civile (far left) will likely score between 4 and 6%, and may be unable to reach the Chamber access threshold (4%).
- Beppe Grillo's Movimento 5 Stelle (Five Star Movement) is again on the rise. Movimento 5 Stelle may even reach 20% and become the second largest party in the country.
- The first wild card is a high and rising number of undecided voters.
- A second wildcard factor is the recent rise of "Fare per Fermare il Declino" (literally "Act to Stop the Decline", acronym FiD), a primarily Libertarian party founded less than a year ago.
Grillo's public meetings are getting "oceanic", he is attracting many people disappointed with this political class with a very populist program.
In the campaign you can hear some extremely populist proposals, most of them from Grillo, Berlusconi, and Rivoluzione Civile.
Populist Proposals
- Give back Real Estate tax collected in 2012 (Berlusconi)
- Forbid foreclosure of the main house of a person or a family in case of delinquency (Grillo and Berlusconi). Imagine the effect on mortgage issuance!
- Give a minimum guaranteed survival wage from the government to all those are unemployed (Grillo, Rivoluzione Civile).
- Even Monti is promising to cut taxes, the same taxes he decreed (and that center-left and center right approved as well).
Assuming the Center-Left hangs on to win the Chamber, the outcome in the Senate is crucial as to whether or not there is a hung Parliament. The regions are, Lombardy, Veneto, Lazio, Sicily, Campania. By far the most important is Lombardy, with the highest number of senators.
In regards to the Senate outcome, it's important to look at a very recent rise of FiD, "Fare per Fermare il Declino".
FiD was founded by a liberal/libertarian economic journalist (Oscar Giannino) and free-market oriented economists, some of them teaching in the US.
FiD has a program of 10 main points. They have a "pro-market" agenda, not a "pro-business" agenda. The party is extremely disappointed with the policies of Berlusconi and Monti.
They want to stay on the euro, deeply cut public spending, and deeply cut taxes as well. They also want to reduce public debt via sales of public assets, cut highest pensions, and reform the job market.
Their proposals are the most libertarian ever seen in Italy and extremely aggressive by Italian standards.
The party has very little support from media and no "brand awareness" yet they seem to be in a fast upward trend in social media. Some FiD messages and campaigns are going viral, perhaps a sign that something is brewing.
FiD may be able to overcome the access threshold for Chamber at national level and for Senate as well in some key regions. That would be an amazing result. It would probably be the first time that in a "Club Med" country the crisis makes stronger a libertarian party instead of far right or far left.
Another key point is that a significant turnout for FiD could be at the expense of Berlusconi or Monti, especially in the 2 key regions, Lombardy and Veneto. Should that happen, it could help the center-left get the relative majority it needs to avoid a hung Parliament.
Best regards,
AC
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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