Italian Crash: An Update

About a couple of weeks ago I argued that the “crash scenario” of Italian yelds going through the roof, because of a a fall of the Letta government plus inconclusive elections, was reasonably estimated at  52%. As centre-right ministers have now threatend to resign collectively as soon as Berlusconi is banned from Parliament, the bad scenario has become more likely. By revising the likelihood of a fall the Letta government from 80 to 95%,  the “crash” probability get revised upwards,  from 52 to 62%. Despite  President Napolitano’s opposition to new elections soon, it remains to be seen whether a new government will have a better chance to reform the electoral law so as to avoid a new hung Parliament .

PS:Update: (today 28/9/2013)  the Centre right ministers resigned. As the fall of the Letta government is now a sure event, the crash probability shoots up  to 65% .