What if Meloni's government collapses and Italy heads to snap elections?
A Meloni collapse is a peripheral-spread trade: snap-election risk widens BTP-Bund past 250bp, drags Italian financials (BTP-heavy bank books) and bleeds into the broader euro periphery before any US tech leg. Closest analogue is the 2018 Lega-M5S budget standoff (spread ~150 to 320bp, FTSE MIB banks -20%), not Lehman. Italy funds itself domestically now; ECB's TPI backstop caps the tail, so fade spread blowouts toward 280bp.
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The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 1–3 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a risk-off shock. Snap Italian election looms after coalition fracture, BTP-Bund spread blows past 250bps on stability fears. The trigger decomposes into signed root‑shocks — Credit spreads ▲ · Geopolitical risk ▲ · Risk appetite ▼ — which propagate through our causal graph to the markets below.