All roads lead to Berlusconi’s Rome. For now.

Discussion in 'Europe' started by hvactec, Oct 31, 2011.

  1. hvactec
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    hvactec VIP Member

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    The euro zone’s future hangs on Italy – and Italy’s future hangs on its politics. The best way forward would be a grand coalition replacing Silvio Berlusconi’s discredited government. But after the prime minister’s Houdini act last week, that doesn’t seem likely and other scenarios aren’t as attractive.

    Until recently, investors didn’t pay too much attention to the multi-dimensional chess game that is Italian politics. The state may have nearly 2 trillion euros of debt, equal to 120 percent of GDP, but the country is rich: Net household wealth was 8.6 trillion euros in 2009, according to the Bank of Italy. The deal-making and back-stabbing in Rome – or for that matter, Berlusconi’s bunga-bunga sex parties – didn’t seem to matter. True, the country has virtually stopped growing in recent years. But there was even a view that Italy benefited from having politicians that were so concerned with their elaborate games that they couldn’t interfere with the business of business.

    All that changed in early July. As the euro crisis gathered pace, scandals and wrangling in Rome unsettled markets. The 10-year bond yield, which had been a relatively comfortable 4.8 percent, shot up to 6 percent in two weeks. Berlusconi and Giulio Tremonti, his previously respected finance minister, fell out. The center-right government, which survives on a wafer-thin majority, was able to pass austerity measures to cut the deficit. But the actions were seen as too little, too late. Investors became hyper-sensitive to Italian politics and were no longer willing to take things on trust.

    The rot was only stopped by the European Central Bank wading into the market in August and buying Italian bonds. But even this bought only temporary respite. Despite two European summits last week designed to provide a comprehensive solution to the euro crisis, Italian yields ended the week back at 6 percent. The country is on the edge of a debt spiral as investors’ concerns about the country become self-fulfilling. If borrowing costs rise further, the country’s debts won’t seem sustainable, meaning yields could shoot still higher.

    The best way of breaking the vicious spiral would be to have a positive political shock – to counter the negative one delivered over the summer. And the best way of achieving that would be to have a temporary grand coalition led by a technocrat such as Mario Monti, the former European Commissioner. Its mission would be to take harsh actions needed to solve Italy’s two big problems: debt and low growth. Labor markets would be liberalized; the bloated public sector would be cut down to size; and the over-generous pension system would be reformed. It might even be possible to reduce debt to below the psychologically important 100 percent mark by privatizing assets and instituting a one-off property tax.

    READ MORE All roads lead to Berlusconi’s Rome. For now. | Hugo Dixon
     
  2. Baruch Menachem
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    Baruch Menachem '

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    People have been predicting Berlesconi's political demise for 20 years. He is the Energizer Coniglietto of italian politics. Continua andaree ed andare ed andare
     
  3. waltky
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    waltky Wise ol' monkey Supporting Member

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    Granny says, "Another one o' dem rich folks dat ain't been payin' dey's fair share o' taxes...
    :clap2:
    Berlusconi denounces verdict, 'political' judges
    Oct 26,`12 -- Ex-Premier Silvio Berlusconi has condemned as "unreal" his tax fraud conviction and said it was the result of "politicized" judges who have made Italy unlivable and no longer a democracy.
     
  4. waltky
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    waltky Wise ol' monkey Supporting Member

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    Monti ready to make a comeback...
    :clap2:
    Monti says he is open to leading next government
    Dec 23,`12 -- After keeping Italians, and the rest of Europe, in suspense for weeks, caretaker Premier Mario Monti on Sunday ruled out campaigning in February elections, but said he would consider leading the next government if politicians who share his focus on reform request it.
    See also:

    Mario Monti 'available to lead Italy'
    23 December 2012 - There has been intense speculation about Mario Monti's possible role in elections
     
  5. waltky
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    waltky Wise ol' monkey Supporting Member

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    Berlusconi in his political afterlife...

    Berlusconi set to discuss Syria and Ukraine crises with Putin
    Sept. 9, 2015 -- Former disgraced Italian Prime Minister Silvio Berlusconi is coming to Russia on a private visit on Thursday to meet with President Vladimir Putin.

     

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