"Italian Voters! Achtung! We're Doing You a Favor by Not Honoring the Results of This Election."

UPDATE: Succinct statement on Italy's political crisis lifted from the comments section of this morning's post, "Italy’s Political Crisis….How Ugly Might It Get?," by Yves Smith:

Please take the time, if you will, to ponder on article 1 of the Italian Constitution, and tell me how 25% unemployment, a majority without government, a government without majority, the fifth unelected prime minister in 5 years and street protests against the Head of State square with this:

Italy is a democratic Republic founded on labour. Sovereignty belongs to the people and is exercised by the people in the forms and within the limits of the Constitution.

****

I read the headline in the airport "Populist Parties in Italy Fail to Form Government," and I was confused. I had been away from newspapers and television news over the weekend. Last I heard the M5S-League government was on its way to a successful launch. Maybe there had been a last second dust-up between Salvini and Di Maio over the choice of Paolo Savona, an academic who has questioned the wisdom of the euro, as minister of the economy.

But that was not the case. Reading the story by the odious Jason Horowitz, it was apparent that the headline was one of the more misleading in a seemingly daily grab bag of misleading headlines. The populist parties did not fail to form a government. President Sergio Mattarella tomahawked the infant government as it was exiting the birth canal.

In this he did the bidding of the banks, the member states of the European Union, as well as the mainstream press. All had been calling for Mattarella to crush the M5S-League upstarts. They got their wish. Even better for the neoliberal center, Mattarella asked a former International Monetary Fund bureaucrat to form a new government.

As Jason Horowitz reports today in story with a much more accurate headline, "Italian President’s Loyalty to the Euro Creates Chaos":

On Monday morning, as markets rose and fell with the whiplashing events in Italy, Mr. Mattarella gave a new mandate to form a government to Carlo Cottarelli, a respected economist, former International Monetary Fund official and Italian government appointee, who told reporters that he would form a caretaker government only with the goal of passing a budget and guiding Italy to new elections.

If Parliament votes in support of his caretaker government, elections would take place in early 2019. If it does not, which seems much more likely, he would quit “immediately” and elections would take place sometime after August.

RT reports that there is zero chance that Cottarelli's technocratic government will be supported in parliament:

Italian journalist Marcello Foa told RT that Cottarelli’s chances of forming a new government are “non-existent,”noting that the anti-establishment Five Star Movement (M5S) and its rightist coalition ally Lega Nord are unlikely to support Cottarelli’s efforts because they would then “lose all credibility with the voters.” The two parties were the top performers in March’s parliamentary elections and have spent the last two months negotiating the formation of a coalition government.

Yanis Varoufakis appears on the mark with his dissection: "President Mattarella of Italy: From moral drift to tactical blunder":

Beyond his moral drift (as he condones Mr Salvini’s industrial-scale misanthropy while vetoing a legitimate concern about the eurozone’s capacity to let Italy breathe in its midst), President Mattarella has made a major tactical blunder.

In short, he fell right into Mr Salvini’s trap. The formation of another ‘technical’ government, under a former IMF apparatchik, is a fantastic gift to Mr Salvini.

Mr Salvini is secretly salivating at the thought of another election – one that he will fight not as the misanthropic, divisive populist that he is but as the defender of democracy against the Deep Establishment. Already last night he scaled the high moral with the stirring words: “Italy is not a colony, we are not slaves of the Germans, the French, the spread or finance.”

If Mr Mattarella takes solace from the fact that previous Italian Presidents managed to put in place technical governments that did the establishment’s job (so ‘successfully’ that the country’s political centre was destroyed), he is very badly mistaken. This time around he, unlike his predecessors, has no parliamentary majority to pass a budget or indeed to give his government a vote of confidence. Thus, he is forced to go into elections that, courtesy of his moral drift and tactical incompetence, will return an even stronger majority for 5S-Lega, possibly in alliance with the enfeebled Forza Italia of Silvio Berlusconi.

And then what Mr Mattarella? 

For a sample of how the mainstream is spinning Mattarella's radical move, take a look at "What Comes Next for Italy?" by Beppe Severgnini, editor in chief of Corriere della Sera’s magazine 7:

Right or wrong, the financial markets and the rest of Europe were convinced that the proposed government was a fundamental threat; now that it has been sidetracked, they will do what they can to prevent its return.

[snip]

It sounds naïve to say it, but the real winners here are Italy’s voters. Thanks to their coolheaded president, they have a chance to rethink their answers to a very important question. By voting for the League and Five Star, they set Italy on a collision course with the European Union. British voters made a similarly emotional decision to leave the union, and they don’t get a second chance. Italy should consider itself lucky: A solid Constitution is better than a rushed referendum.

This is how the radical neoliberal center paves the way for fascism -- "Voters! Achtung! We're doing you a favor by not honoring the results of this election."


Neoliberal governing elites will not accept that their "markets are always right" paradigm is decades beyond its sell-by date. It must be discarded.

In fact, overturning elections, governing according to markets, has been rejected by the markets. According to Horowitz's story today,

At first, markets seemed more appreciative of Mr. Mattarella’s rejection of the populist government, but they then fell sharply, with stocks and bonds falling as investors digested the increased uncertainty.

“Developments in Italy are likely to keep the financial markets on tenterhooks,” analysts at the German lender Commerzbank said in a note to clients Monday morning. Referring to polls that indicate that Italy’s populist parties are likely to win any snap election called this year, they continued, “The entry into office of an Italian government that is on a confrontational course with the E.U. and disregards its rules is only postponed.”

Italy’s benchmark stock index, the FTSE MIB, was down more than 2 percent in afternoon trading in Europe, and the country’s bonds took a beating. The yield on the main 10-year Italian government bond, which moves inversely to its price, rose to as much as 2.69 percent, its highest level since August 2014.