Tuesday, February 26, 2013

Market concern in Italy Renewed


The concerns Over Europe’s debt crisis renewed and triggered by Italy’s inconclusive election as recession-scarred voters repudiated budget rigor and established former comedian Beppe Grillo as a political force.
In the four-way race, pre-election favorite Pier Luigi Bersani won the lower house by less than a half a point. Silvio Berlusconi, the former premier fighting a tax-fraud conviction and charges of paying a minor for sex, called for a recount and won a blocking minority in the Senate. In its first national contest, Grillo’s group got more than 25 percent support.
“The political situation across Europe is effectively a race between austerity and reforms on the one hand and the rise of populist movements on the other,” said Alberto Gallo, head of European macro credit research at Royal Bank of Scotland Group Plc. “Austerity is painful, and if reforms are not implemented in time, you run the risk of social unrest and populism. It hasn’t happened so far in Greece, it hasn’t happened in Portugal or Spain, but we are very close in Italy.”
Berlusconi and Grillo, the candidates running to reverse the austerity implemented by incumbent Premier Mario Monti to contain the region’s financial crisis, scored about 55 percent of the popular vote. The euro fell to a six-week low, Italian bonds declined and U.S. Treasury notes rose as the results trickled in. 

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