Berlusconi is Second in Italian Polls Prior to Elections

The center-left democratic party candidate Pier Luigi Bersani leads with 34% of the vote, but Berlusconi is close behind with 30%.

Two of the four leading candidates in the Italian election are convicted criminals. Such is the state of politics in this highly-indebted country as Italians go to the polls this weekend to choose a new government.

Recent market action shows global investors are nervous about the outcome. Italy’s stock market sold off sharply on Thursday and its interest rates have started to rise again. The reason: It is quite possible that no party wins a strong mandate—leading to an unstable government, paralyzed by infighting, and unable to fix Italy’s finances.

Italy is the third most indebted country in the world after the United States and Japan, owing 1.9 trillion euros ($2.5 billion).

If Rome doesn’t continue to right its financial ship by cutting government spending and reforming the economy, so it can grow faster, lenders worry Italy will not generate enough tax revenue to pay back its debts—possibly leading to another round of financial chaos and contagion as we saw in 2010 and 2011 in Europe.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza