Italy reshuffles the deck.

Just when you thought you had the Italian scene figured, the government fell Friday after Berlusconi's Party left the coalition. While, speculation is rampant about the future of now former PM Mario Monti, interest now is focused on the coming election in February.

The main players.
The election pits Berlusconi (center right) against Bersani, an  actual member of the Communist Party.

The main issue.
Monti was a "reform" politician, which in today's parlance is someone seeking "austerity" and reduction in spending by the govt. Neither Berlusconi, nor Bersani want to continue with the Monti "reforms" that put Italy into a recession.

Response of the Markets.
So far, the response of the Markets is an increase in Italian bond yields. The Markets expect a return to the pre-Monti days if Berlusconi is successful and an outright disaster if the Communits come to power.

What about Berlusconi?
Berlusconi is a Billionaire and has the reputation of an Italian stud. Remember his 'bunga bunga' parties? Anyway, he was accused of having sex with an underage prostitute. She disappeared. This does sound like a mystery novel.