Italian politics is nothing if not entertaining. Unfortunately, given current circumstances that entertainment value is more akin to watching a slowly unfolding horror show rather than a good time at the circus.

Last week was dominated by the machinations for the election of a new president, which ended after eight rounds with incumbent Sergio Mattarella elected to another seven-year term at the spry age of 81.

Mattarella was supposed to retire.

It was supposed to be the ascendance to godhood for Prime Minister Mario Draghi who would replace Mattarella controlling the fate of Italian politics for the rest of the decade.

That did not materialize, because Draghi, despite the endless platitudes thrown around in the Western press, is hated inside Italy, and not just by the people he’s turned into second-class citizens, but by his fellow politicians.

Reports of Draghi pulling a Justin Trudeau (You need to translate this from Italian) and ducking out out of Parliament for the vote because of an illness is the height of Davosian bullshit. (click here for the final results)

Draghi had no real support within the parliament if it meant them having to deal with him for the next seven years.

Davos finally lost a big move in Italian politics from within the government for the first time in the last decade. They’ve proven adept at external manipulation and betraying the Italian people regardless of how they voted previously, but it looks like their typical top-down head-chopping approach to politics has finally backfired on them.

For the past seven years we’ve been treated to a masterful performance by Mattarella doing Davos’ bidding, inserting himself into the governing process where no Italian president has in the past.

He dragged his feet on allowing Lega and Five Star to even attempt to form a government in the first place after winning in 2017. Then he vetoed (with a very dubious exercise of his informal powers) their first offer of finance Minister, Paolo Savona, who was dead set on taking Italy out of the euro.

Since the emergence of a sincere populist wave across Europe which began a decade ago in places like Greece and Catalonia, Spain, Italian politics have been even more vituperative than they normally are and Mattarella has been the one holding things together for Davos these past few years.

When Lega’s Matteo Salvini made his big move back in August 2019 to force snap elections mid-term and failed, it set Italy on the path to where it was supposed to go this week — under the “steady hand” of Super “Whatever it Takes” Mario.

Salvini collapsed the fragile coalition with Five Star Movement hoping to force new elections because at the time Lega was polling north of 35% and could have brought a nearly unified populist government to Italy, kicking out the old guard represented by people like former Prime Minister PD’s Matteo Renzi.

Mattarella refused to allow new elections and eventually Five Star’s leader Luigi DiMaio betrayed his own voters by making a deal with Renzi to form another unstable coalition. This instability eventually ended with the formation of a technocratic, caretaker government with Salvini having to back Super Mario Draghi as Prime Minister, to lead the country during the upcoming Coronapocalypse, or face jail.

It was a brilliant piece of political maneuvering which cut the throats of both Five Star and Lega in the minds of Italian voters. Both Salvini and DiMaio were now seen as fake populists, willing to trade continued access to power for taking a principled stand.

Whether Salvini was complicit, inexperienced or just plain incompetent is irrelevant. He and Lega voted for Mattarella but refused to grant Draghi his coronation this week. He left the principled opposition to Georgia Meloni and the Brothers of Italy (FdL).

That’s led us to where we are today. A little less than eighteen months away from parliamentary elections in Italy the polls show no clear front-runner as Salvini’s Lega has lost the high ground to FdL now splitting the center-right vote.

That split has also stymied any further overall gains by the center-right — polling overall between around 45% for more than a year now — including Forza Italia (FI) with no clear majority coalition possible if any vote were held today.

But with opposition to Draghi’s implementation of the Green Pass, i.e. full blown travel papers, and turning the government apparatus against the unvaccinated in the most brutal way, there was no political will to promote him to President where he would wield even more power than as Prime Minister.

Because in Italy, the President has a bit more power than other European ‘heads of state.’ The president controls the military apparatus. So, it was clear that Davos was trying to engineer another ‘coup from the top’ like they’ve done in so many other places around Europe and the U.S.

Italy is a key member of the European Union and any threat to its continued membership is always met with murky backroom deals and the back-stabbing of Davos’ opponents. Italy simply cannot be allowed to assert its independence from the European project.

At least not while the current crop of pols lead the major parties and Italians begin taking their politics seriously and either vote these morons out or take more drastic measures.

So, while Bloomberg and the rest of the normie financial press are cheering an extension of the Draghi/Mattarella show in Italy, no one else should be.

Draghi was initially seen as a top contender for the job and made it clear he would be keen to become head of state. The former ECB president was thwarted by lawmakers in his own unity government who feared a return to political turmoil without Draghi at the helm.
The outcome could provide relief to investors as it reduces the chances of early elections and will let Draghi press ahead with his reform agenda until the next election, due in 2023.

Mattarella had tapped Draghi to lead the government amid political chaos at the start of the Covid pandemic. Parties across the ideological spectrum agreed to suspend their political jockeying and back Draghi.

Yeah, sure. If he was so keen to take the job why was he not present to lobby on his own behalf and why were there 721 blank ballots out of 1009 in the first round of voting?

So, where does this leave Italy today?

First, it means no real change for the rest of this year. Mattarella is old and infirm. And the word is that he took the job to get the country through next year’s parliamentary elections. At which point they will try to force Draghi on Italy again.

Good luck with that.

Second, it means that Draghi’s reign in Italy is quite weak. While the financial press has spun this as good for the markets because Super Mario means ‘stability’ or some other rotten nonsense, in the face of a Fed determined to end QE and raise rates that’s just a Jim Cramer sized dollop of cope while exit strategies are formulated in family offices all over Europe.

Third, it really means that Davos is losing control over places it’s supposed to have sewn up completely. COVID restrictions are being lifted all across the northern European states as the narrative will now shift away from the virus to Climate Change.

But those countries in heavy debt to the ECB and who could challenge the German-led EU order have to be crushed under their bootheel. So, don’t expect Draghi to let up here, no matter how weak his position is. Italian politicians ultimately voted for the status quo because of the need to secure the EU’s COVID relief funds to keep the country from imploding in the next few months.

That, however, is literally just borrowed time and the newly-revealed fragility in Rome only ups the pressure on the EU and the ECB to do something drastic soon.

Did anyone happen to notice the collapse of the euro post-FOMC? I sure did. That’s your canary in the coliseum.

To everyone still thinking U.S. finances are worse than Europe’s I’m seeing nothing but kryptonite for Super Mario when he returns from his bunker.

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