Today, the Italian Senate will vote at 8:30 PM whether to formally expel the 76-year old former prime minister, Sylvio Berlusconi. Concurrently, the winner of three of the six Italian elections in the past 20 days will launch a delayed nationwide address on his political future. The contents of said address are unclear however, as Reuters reports, "political sources and local media said he would not use the address to torpedo the fragile left-right governing coalition of centre-left Prime Minister Enrico Letta - at least for now - despite weeks of threats to do so."
Furthermore, as WSJ adds, citing a column in daily newspaper Il Fatto Quotidiano, Marco Travaglio noted that Mr. Berlusconi came in third in the February vote but managed to pick the head of state, the prime minister and the government program. "Given all that, it would be crazy to trigger a crisis," observed Mr. Travaglio, a longtime critic of Mr. Berlusconi. That said, and as is well-known, the media magnate is highly unpredictable and in the past has made several versions of video announcements so he can choose one only at the last minute. However, no matter the content, what is most curious is that the vote, the Berlusconi expulsion vote and nationwide address, as well as the Bernanke press conference, which is also due at 2:30pm Eastern, will all coincide.
Since Berlusconi's decision of just which tape to broadcast will be vote contingent, and since an adverse vote may provoke the Italian to force a government crisis since he will no longer be part of it, and will seek to capitalize on the ensuing chaos, keep an eye on those headline scanning algos, who will already have their plates full deciphering Bernanke's headlines. Because while the "taper may be priced in", a double whammy of the Fed commencing tightening (which is what tapering really is, despite the punditry's vocal protests to the contrary) and a brand new European crisis (recall the widest Italian bond spreads over the past few years had everything to do with Berlusconi again), may be more than even the NY Fed-Citadel HFT hotline may handle.
Reuters provides a rundown of the items on today's vote docket in the Senate later today:
The Senate committee on Wednesday night is expected to reject a recommendation by a senior PDL member of the panel, Andrea Augello, to confirm Berlusconi as a senator. It will then elect a leftist replacement for Augello - there is an anti-Berlusconi majority in the committee - who will draw up a recommendation to expel him which should be voted on by early October. After that the case goes to the full Senate for a final decision expected by mid-October.
Any of these votes could trigger a crisis although Berlusconi may be waiting until November, when he can paint it as a battle against moves by the center-left to raise taxes as part of next year's budget discussions. Berlusconi is also thought to be trying to find a way to blame a crisis on the fractious PD, which is in turmoil ahead of a party congress in the autumn, where charismatic Florence mayor Matteo Renzi is expected to be elected party leader.
As for how Berlusconi may react to a worst-case outcome.
Angelino Alfano, secretary of Berlusconi's center-right People of Freedom (PDL) party, said his leader would make a final decision on the government only after the vote, where Letta's Democratic Party (PD) says it will support expulsion.
In recent days, the billionaire businessman has appeared to step back from threats to bring down the government over the vote, which follows a conviction for tax fraud in early August.
Instead he is expected to resurrect his first political party, Forza Italia (Go Italy), rail against leftist judges he accuses of persecuting him and vow to remain in politics despite the conviction which will confine him to house arrest or community service for most of the next year.
He wants Forza Italia to replace the PDL in an attempt to revitalize center-right voters and appeal to young people.
Political sources say Berlusconi appears to have listened to PDL doves, business allies and members of his family who believe sparking a crisis now could badly rebound on the center-right as well as damaging his media empire financially.
All of this would be great news if Berlusconi was a stable, rational person, who listened to reason. Alas, none of that is applicable.