|(Picture by norfolkdistrict via Flickr)|
Berlusconi wants to step down, but at his own conditions. The world markets are at risk of collapsing.
The reign of Berlusconi is over. Or, at least, it should be. On Tuesday, for eight votes, the lower house of the Italian’s parliament failed to gain the majority (308 votes instead of 316) during the budget’s session. Berlusconi says he will step down, once the austerity measures are approved. Nonetheless, he wants new elections in February and one of his men to lead the transition process.
Like a poker’s player, he expects the maximum result out of the last deal. He could instead be remembered as the man who gave the final push to the world market. In fact, there is no more time for political games. Italy must implement the reforms as soon as possible. A broad-based government would be the best choice to take Italy out of the swamps.
Are politicians sizing the importance of the moment?
Probably, they are not. Greece’s Prime Minister Papandreou is straggling to organize a unity government. Issues over the leadership are emerging. Tomorrow morning, the leaders of both parties will meet in Athens again. A solution is necessary, if they want E.U. funding. Lucas Papademos, a former E.C.B vice-president and ex-governor of the bank of Greece, is one of the candidates.
The task is titanic. The hair cut and the rescue package might not be enough to avoid a Greece’s default next year. In the mean time, Europe is sliding into recession. In September, both industrial production (-2.7% m/m) and manufacturing production (-4.3% m/m) fell in Germany.
What could happen next? The world’s economy might contract further, if the Italian's transition will not be smooth. The U.S. dollar could play the safe heaven’s role. The leadership would continue for the first part of 2012.
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