Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Chaos in Italy

US equity markets finally appreciate the significance of political chaos in Italy.  What took so long?  As frustrating as Berlusconi might be, don't forget that this is a self made multi-Billionaire businessman who clearly understands the private economy.  He controls a large media empire, including radio, TV and newspapers, and clearly understands how to manage public opinion.  Yet he has failed to coalesce a majority to support his austerity plan.  What makes the market think the next guy is going to be better???  It is more likely that the next Italian PM is going to try to placate the public, which is going to delay the rationalization of the Italian budget. 

Italy has a history of political instability.  There have been 60 different governments since WWII,  but Berlusconi survived a full five year term.  There is every reason to believe that Italy will enter a new period of instability.

Please remember that France will have a Presidential election in mid-2012 and Sarkozy is in about the same posiiton as Obama.  The socialist party could gain control of the French presidency, and again, it would be a step back in terms of addressing the budget issues. 

These are dangerous threats to global economic stability.