Italy votes – will it mimic the referendum?


Remember the 2016 Italian referendum which was to decide on  whether to grant more power to the incumbent party to accelerate decision making? Well it ended up being a vote on ousting then PM Renzi who put his resignation on the ballot if it failed. The split between the yes/no was largely decided by economic condition. The poorer southern regions were distinctly red while a smattering of wealthy areas voted green (yes).

It is kind of telling that the furthest province in the north (Bolzano/Bozen) had the highest YES vote (63.69%) in the country while the Province of Catania (south-east Sicily) had the highest NO vote at 74.56%. Bolzano/Bozen was diligent with a 67.41% turnout vs 57.41% in Catania. It is a rich/poor divide by the looks of things. If you wish to dig into the details look no further than this site for who voted how.

The last poll showed Beppo Grillo’s eurosceptic M5S party leading with 28%. Berlusconi’s centre right Forza Italia alliance with the anti-immigrant The League is expected to get around 29%. The incumbent PD is looking at around 20%.

Since the collapse of Lehman in 2008, Italy has added 3mn to poverty (now 18mn or 29.7% of the population; EU average is 25%) with the unemployment rate above 11%. Since Merkel’s open door policy 600,000 illegal immigrants have flocked to Italy from Libya.

Italy is the 3rd largest economy in Europe and 30% of corporate debt is held by SMEs who can’t even make enough money to repay the interest. The banks have been slow to write off loans on the basis it will eat up the banks’ dwindling capital. It feels so zombie lending a la Japan in the early 1990s but on an even worse scale.

Monte Dei Paschi De Siena, a bank steeped in 540 years of history has 31% NPLs and its shares are 99.9% below the peak in 2007. Even Portugal and Spain have lower levels of NPLs. The IMF suggested that in southern parts of Italy NPLs for corporates is closer to 50%!

However one views the rising wave of nationalism in Europe, Italy will likely follow the pattern of Austria, the UK, Germany, Holland, Poland, Hungary and France. A growing number of European citizens want to be first in line rather than feel they have an EU directed obligation to bow down to political correctness. How else do we explain the AfD’s surge past the SPD?

If the eurosceptic/anti-immigrant patties get up  we shouldn’t be the least surprised. More Europeans want their own countries to be made great again. The house of cards is crumbling.

The similarities between Austria’s electoral map and the US


Here is the electoral result map of Austria. The socialist’s Van der Bellen (the winner) in green  and the right wing’s FPO candidate Hofer in blue. The areas that lie on the border which saw a greater impact from asylum seekers would have appeared to back the anti immigration party. It isn’t an exact science.

The first thing that struck me was how similar it was to the US presidential election in its concentration. Below is the map of the US election result by electorate. In both cases the larger cities voted for the liberal candidate and the more rural areas for the conservative.



I did expect Hofer to win. I was wrong.  It wasn’t the polls that led to that assumption. As I said yesterday I didn’t think Trump was a factor  either as Europe, like any other rational country voted on its own issues rather than the outcome of another country’s election. I expected the fall out from voter fraud and the inside job at the previous election would be a bigger driver.

While this does buy the Eurozone time, we await to see whether the Italians reject the referendum. Of course a YES vote would remove the political gridlock so prevalent in Italian politics over decades but the question remains whether Italians are wanting the status quo to have more power in a system that’s failed them for too long. Is it the political system that failed (hence the referendum) or is it the incumbent parties that need to be turfed out. We’ll know soon enough.