With Beppe Grillo unwilling to form a coalition government, and with former Prime Minister Silvio Berlusconi making demands that Bersani will not go along with, Italian President Giorgio Napolitano Considers Options.

One of those options includes stepping down early so the next president can call elections. Under Italian law, an outgoing president is restricted. Napolitano’s term ends mid-April.

Napolitano, who met with lawmakers yesterday, may make an announcement today, the president’s spokesman said late yesterday. Napolitano will continue talks with leaders in parliament and may consider resigning, daily La Repubblica reported today, without citing anyone.

To reach a compromise, Napolitano would need help from lawmakers loyal to either former Prime Minister Silvio Berlusconi or Beppe Grillo’s Five Star Movement. Berlusconi said yesterday he would back a government in partnership with the Democratic Party, while Grillo reiterated he will shun a deal with other parties.

“We were and still are open to giving life to a coalition,” Berlusconi, 76, said yesterday after meeting Napolitano. “We think it’s logical that if we form a government together, a coalition government, then together we must discuss about who will be the best president of the republic.”

Vito Crimi, Five Star’s head in the Senate, and Roberta Lombardi, the party’s leader in the Chamber of Deputies, repeated their resistance to compromise after meeting Napolitano yesterday. That position was praised by Grillo later in an interview broadcast on his website.

“We’re going to win with our ideas and our strength because we’re a miracle,” Grillo said. “We are the French Revolution without the guillotine.”

Poison Pill

Silvio Berlusconi is willing to form a coalition but his price of admission is high.

Berlusconi wants to shield himself from further lawsuits, and he wants new rules favorable to his PdL party. He also wants the PdL to name the next president.

Grillo would never go along with such demand, and Bersani has thrice ruled out such a deal.

The sane thing to do would be for Napolitano to step down so there could be early elections. If he goes the route of attempting to find a technocrat suitable to everyone, the odds of success will be very low, and the odds the election delayed until September, high.

My main scenario remains No Working Government for 7 Months, Then Elections in September but an early resignation by Napolitano could alter the time line.

Mike “Mish” Shedlock