A half burned Italian flag was the info graph chosen by Bloomberg TV to open its morning edition on Tuesday. Within three minutes, the American network stated: “the Europe crisis is back”, “this is the Euro crisis, part II” and “welcome back to the euro crisis”. Not bad as speculative journalism goes.
But not so fast. It is true that on Monday after the first doubts about Italy’s governability arose, Wall Street started losing steam and ended up with the biggest cuts so far this year. Yet it is also true that stocks are in their 5 years maximums, and that there was no other driver in the markets. Wishful thinking? Tuesday’s opening in green points out that it is not. Center-right Silvio Berlusconi, after all, has conceded victory to center-left Pier Luigi Bersani, and have even offered a coalition government.
US investors went to bed concerned about a possible recount of votes solicited by Berlusconi, and that tension is reflected in Tuesday’s front page of the Wall Street Journal, that claims that “Messy Italian Election Shake World Markets”. In the article it interprets the results as a rebuff of Merkel’s austerity only focus: “A majority of voters endorsed parties that had promised to tone down or even reverse the financial sacrifices Italy has promised its European partners”. A point the newspaper emphasizes in an op-ed. After describing Monday’s voting as “Elections, Italian Style”, if points out its conclusions: “Austerity doesn’t win votes”, “Standing for nothing can be a winner” and “Silvio Berlusconi may be politically immortal”.
Berlusconi has denied to be thinking of asking for a recount, it seems that the center left has clearly won. So, what is the problem? To start with: Wall Street’s loved Mario Monti (one of theirs, an ex Goldman Sachs’ boy) has been hurtfully defeated. Whether it is because he entered the same kind of political show as Berlusconi, or because Italians think rising taxes and cut spending is not going to work, the truth is that the professor is dead politically. At least for now.