Italian politics would be a tempest in a teapot except Italy is a significant part of the EU, it has a lot of debt, and its banking system is a mess. From Tom Luongo at tomluongo.me:
With the resignation of Prime Minister Giuseppe Conte the future of Italy is now up in the air. There are many things that come into play with Conte resigning before the No-Confidence vote tabled by Lega Leader Matteo Salvini could take place.
The euro popped 40 pips, back above support at $1.11 on the news. The forex markets realize this was a Brussels-friendly move.
Conte didn’t want to chance getting voted out of office. That makes it difficult for President Sergei Mattarella to call for a new government without snap elections. The Italian Senate would have formally rebuked Mattarella’s compromise pick for Prime Minister, Conte.
Conte was there to effectively keep the children in line – Euroskeptics Lega and Five Star Movement (M5S). So, Conte used his time to take the bully pulpit and excoriate Salvini for twenty minutes. This gives the U.S. and European media plenty of chum to make their case against Salvini.
You will hear a lot about how non-partisan Conte did this for the sake of Italy to stop the mad, selfish and unprofessional Salvini from taking power.
It’s good political theater but it’s as disingenuous as the day is long and very much the truth. No one in power in Brussels wants what Salvini is selling. Not many in Rome do either.
Because had he not resigned Mattarella could have faced impeachment for not going to elections. He only relented to let M5S and Lega take power under that threat last year.
So Conte has set the stage for Mattarella to take charge again. They will put the veneer of legitimacy on this process to protect Italy from Salvini. In reality, the only people they are protecting are in Brussels.
