After all, wasn’t it not so long ago that some Europeans were whining about the value of the euro being too high?
Well, after ex-Premier Silvio Berlusconi’s startling reemergence on the political stage in Monday’s Italian elections, that doesn’t look to be a problem any more. Check out the chart, which shows a sharp slide in the euro starting Monday afternoon once it became clear that Berlusconi did much better than first thought:
Lombard Street Research, a London-based economics shot, gives a nice big picture summary of why this election has broader implications for Europe:
There is a more subtle message from these elections. One that if the rest of Europe ignores, will be disastrous for the euro in the longer term. This was a vote against austerity. Berlusconi, whose political career was in tatters 12 months ago, resurrected himself (he’s likened himself to Jesus on at least two occasions) by turning against ‘German austerity’ and promising large-scale tax cuts. Similarly, Beppe Grillo (who is anti-everything) wants to default on Italy’s debts and hold a referendum on the euro. Together they secured more than 50% of the popular vote. In fact, Grillo’s Five-Star Movement won more votes than any other political party. If he wasn’t completely anti-establishment and could form a coalition with some of his political peers, it might now be his task to form a government.