Sometime next month just over 100 Cardinals will meet at the Vatican in Rome to select the next Pope and, in doing so, set the course for the Catholic church for the foreseeable future. But before that historic event unfolds, another impactful vote will be held in Italy that will also have long-lasting ramifications. This weekend the citizens of Europe's third-largest economy head to the polls in what is set to be a real nail-biter of an Italian election.
The political turmoil in Italy may seem like a distant concern to investors here. However, more than one market watcher has said, at the very least, it bears watching, and at the very worst it could carry wide-ranging ramifications for the country and even the region.
"On a certain level we should be concerned about it," says Kenny Polcari, director of floor operations for O'Neil Securities, in the attached video. "It might dictate what future policy is going to be like in Italy and whether they're going to go back and tear down all those austerity measures and tax reforms that [outgoing Prime Minister] Mario Monti put in place."
If we've learned anything from tracking the Euro crisis over the past few years, it's that nothing that happens in Europe, happens in isolation. Just look at France. When that country chose an anti-austerity socialist to be President last May, it wasn't long before tax rates on millionaires were jacked to 75%, the country's credit rating sank once again, and most recently, foreign business leaders have publicly mocked the nation and its "lazy workers".
The point is, these things have a way of crossing borders. Italian voters could very well decide to simply cast a vote for change, thereby putting the government in the hands of someone with an entirely unknown agenda. To say that the election is up for grabs is an understatement, since polling is banned in Italy for the final two weeks of the campaign. The last surveys though, done earlier this month, showed it was a close three-way race between former Prime Minister Silvio Berlusconi on the right, Pier Luigi Bersani in the middle, and comedian-turned-candidate Beppe Grillo, a free-wheeling 62-year-old who is drawing large and passionate crowds with his offbeat ideas.
Like the Italians, I confess that part of me would also love to see a colorful outsider such as Grillo (which means cricket in English) take the reins of power and shake things up — which is exactly why pundits think he has a chance. Clearly the European austerity story isn't new or in any way pleasing to follow. But whether the cold realities of cutbacks are being debated here or abroad, why not at least have a few laughs along the way?