Bunga Bunga is Back

Berlusconi says will run for Italian leadership again | Reuters.

Italian billionaire Silvio Berlusconi will stand for a fifth term as Prime Minister of Italy during the next election scheduled for March 10. He has been hinting at this move for weeks, and this explains why the PDL withdrew support for the Monti’s technocratic government Wednesday.

What is really interesting about Berlusconi’s candidacy besides the myriad scandals swirling around him is that he has advocated a return to the lira on several occasions since being booted from office in October of 2011. If Italy gets becomes a victim of the bond vigilantes, we have an idea about what Silvio will do about it.

There won’t be a panic on Monday in the Italian bond market. Investors will take the news of his candidacy in stride, because Silvio has little chance of winning. His party is currently in 3rd place polling behind comedian Beppe Grillo’s protest party.

Outgoing Prime Minister Monti will not run for the position, but he said that he will serve as head of another technocratic government if asked. This article gives Mario Monti credit for Italy’s improving performance on the bond market.

Before we go giving the former Goldman apparatchik any medals, let’s remember that the ECB began providing massive amounts of liquidity first with two rounds of LTRO within weeks after he took office and then in the summer with the promise of OMT. Italian bonds have outperformed those of Spain, but then again Spain is in the midst of a depression.

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