So Silvio Berlusconi, who dominated Italian politics for nearly two decades is gone, but what’s going to happen in Italy now?
He’s been replaced by an unelected “eurocrat” installed by bankers to make working people pay for Europe’s relentless financial crisis.
When Mario Monti took over as prime minister November 14, financial markets gave Italy some breathing space – and it was able to sell 10-year government bonds November 14 at an interest rate of 6.29 percent. The comparable rate for German bonds is 2.25 percent. In other words, just to fund its operations, the Italian government must pay nearly three times the amount of interest that Germany does.
Italian government debt is already equivalent to 120 percent of the country’s gross domestic product (GDP), so the spiking interest rates have big international banks and European Union politicians worried that Italy won’t be able to repay its debts.
Italy is the seventh-largest economy in the world and the No. 2 manufacturing power in the European Union and, in comparison to Italy, with its population of 60 million, the crisis in the relatively small economies of Greece, Portugal and Ireland are a sideshow.
That’s why the heads of the powerhouse countries of the eurozone, German Chancellor Angela Merkel and French President Nicholas Sarkozy, were for weeks ratcheting up pressure on the scandal-ridden Berlusconi to resign–and forcing him to accept oversight by bureaucrats of the European Union (EU), European Central Bank and International Monetary Fund (IMF).
The bankers delivered the final blow when they demanded sky-high interest rates to buy Italian government bonds and a new prime minister who would answer to them rather than the Italian voters. Berlusconi backed passage of an austerity program in parliament, and then made way for his successor, former European Competition Commissioner Mario Monti, a creature of the EU’s administration in Brussels.
Monti has zero electoral legitimacy in Italian politics. He was only eligible to become prime minister after being appointed a senator for life by Italy’s formal head of state.
And there’s no doubt where Monti’s loyalties lie, as a Financial Times columnist noted in reporting a comment from “a prominent Italian banker”: “We need a strong national unity government for one to one-and-a-half years to do what the politicians haven’t had the courage to do.”
