November 8, 2011

Italy in trouble

Silvio Berlusconi, leader of a center-right party has offered his resignation as prime minister of Italy in order to get the European Union austerity measure designed to stabilize Europe's apparent next Greece.  Italy is a socialist country and the loss of the conservative-leaning Berlusconi does not serve the country well.  Nevertheless it seems to be the only way forward and may help prevent this crisis from spreading even more.

The Financial Times reports;
Silvio Berlusconi, Italy’s embattled prime minister, signalled on Tuesday night that he would resign after parliament passes a new financial stability law that will implement fresh austerity measures demanded by the European Union.

Giorgio Napolitano, head of state, said Mr Berlusconi had expressed his recognition of the “urgent need” to respond quickly to the expectations of Europe through the approval of the stability law, which would be amended in light of the most recent recommendations of the European Commission. “With my exit from parliament, the pressure is now on the opposition to pass this stability law with urgency,” Mr Berlusconi said in a phone call to an Italian television station. “This law must contain an amendment containing the measures the EU ... has requested.”
Read the whole story here.

Italy may be both too big to fail and too big to save.  Market reaction late today was positive but the resignation of one man does not solve Italy's underlying problems, nor will an EU bailout.  This situation is far from over.

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