The EU is showing Italians who runs Italy. From Tom Luong0 at tomluongo.me:
Italian President Sergio Mattarella just blew up the European Union. His refusal of the coalition agreement between The League and Five Star Movement threw the best chance for the EU to face its burgeoning political crisis before it became a full-blown sovereign debt crisis.
With U.S. and U.K. markets closed today the full force of the damage done by the EU’s Hail Mary to prevent the Italians forming a government to their specification is actually muted. Things like this always happen on a weekend where the powers that be have enough time to figure out a messaging game plan and reassure markets they’ve got everything under control.
But, let’s round up a bit shall we?
Italian bonds off 25 basis points (!). The euro flirting with $1.16. Spanish and Portuguese debt sold hard, off 5 to 12 basis points. Gold is off a few dollars.
Mattarella, nominally, did this because he didn’t like the choice of Finance Minister, a man who was in favor of Italy leaving the euro. Whatever, he found an excuse. And someone in one of Berlin, Brussels or Washington told him to give a non-hacker the reins to try to form a government.
As Zerohedge reports this morning, that’s simply a non-starter. There is no way that the Italian parliament will approve another technocratic Vishy government on Italy, circa 2011 and Berlusconi’s ouster during the last flare up of Europe’s intractable debt problem.
No, this has to be about something else. This is simply yet another instance of Europe kicking the can down the road.
Sanctions Uber Alles
Look, at the risk of sounding like a guy with a hammer looking to pound in some nails, I have to think that the re-authorization of the EU sanctions on Russia in July is what prompted this desperation move.
But, if a re-vote in Italy can be put off until August (convenient that) then that gives the Trump Administration another six months to exert maximum pressure on our “allies” on trade and tariffs.
It makes sense that Washington is mostly behind this, but don’t underestimate the stupidity of people like Donald Tusk and Jan-Claude Juncker who will literally burn the continent to the ground before giving up their dream of an Europe united in their Orwellian Nightmare.
To continue reading: The EU Strikes Back – Italy Coalition Rejected