Monday, November 7, 2011

Berlusconi under pressure to quit as crisis grows

Italy's borrowing rates spiked to a euro-era high on Monday, piling the pressure on Premier Silvio Berlusconi to resign and make way for a new government that could more forcefully push through economic reforms.
Italy is the new focus of the eurozone debt crisis, as its debts are huge, its growth is slow, and its economy too large to bail out. Investors want the government to urgently pass measures to boost growth and cut debt, but Berlusconi's majority is weakening by the day.
The ultimate fear is that Italy might need to ask for an international bailout to handle its enormous euro1.9 trillion ($2.6 trillion) debt. That is too expensive for Europe to do, and could trigger a default that would break up the 17-nation eurozone and drag down the global economy.
During a G-20 summit in France last week, Berlusconi asked the International Monetary Fund to monitor the country's reform efforts, a humiliating step for such a large economy.
Berlusconi was meeting Monday with his children and close confidantes at his villa near Milan for lunch. The ANSA news agency quoted him as telling aides that such speculation about his departure is "without foundation."
The yield on the country's 10-year bonds jumped another 0.33 of a percentage point on Monday to 6.58 percent, its highest level since the euro was established in 1999 and closer to the 7 percent threshold that forced Ireland and Portugal to accept bailouts.
There is growing concern that Berlusconi is the problem because he no longer commands enough loyalty among lawmakers to ensure the quick reforms that European and international financial officials say Rome must achieve to avoid a dramatic debt crisis like that bringing Greece to its knees.
His coalition government has suffered defections and the possibility of early elections is growing.
Public administration minister Renato Brunetta, a Berlusconi loyalist, acknowledged Monday on TV that the government has a "numbers problem" in parliament and if a majority is lacking then "everybody goes home."
Interior Minister Roberto Maroni agreed, adding "it is useless to persist."
But Berlusconi has remained defiant, insisting Sunday he still commands enough support in Parliament to enact urgently needed measures to save Italy from financial disaster.
"We maintain that there are no alternatives to our government until 2013," when elections are due, Berlusconi told a political gathering by audio hookup.
This week brings the first in a string of votes in Parliament on reforms and other stopgap measures to lower Italy's debt — now at 120 percent of GDP — and revive the dormant economy, the eurozone's third-largest.
If Berlusconi's forces lose upcoming votes in parliament, the Italian president, who has repeatedly called on Berlusconi to take decisive steps immediately to rescue the nation, could intervene and rule that it is time for a new government. But only the loss of a confidence vote can force a government to resign.
The new reform measures include a plan to sell government assets, which is expected to raise euro5 billion ($6.9 billion) a year over the next three years; and tax breaks to(...)More.

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