November 8, 2011

Berlusconi resigned or is he just taking time?

Today the dream of many Italians could have become reality with Berlusconi announcing his resignation after the approval by the end of this month of the austerity budget.
Although my feeling and knowledge of Italian politics would suggest a more cautious attitude.
First he has not resigned yet and he will be in power till approval of the austerity budget, which is supposed to take place at latest by the end of November but given the epic ability of Italian politics to complicate things either willingly or unwillingly could very well last longer regardless of all proclamations of urgency.
Secondly knowing the mindset of Berlusconi he has either struck a deal with the Italian President Napolitano for an amnesty in exchange for his quiet exit from power or he is simply trying to buy time to recover from a majority loss.
It was clear today that Italy was on the edge of bankruptcy if no answer was provided to the total horror of the Italian spread and CDS rates. Italy is clearly weeks if not days away from economic collapse and the total inability of the government to deal with this crisis was shouting for some decisive answer to the markets.
It remains to be seen how many days this resignation promise of Berlusconi will buy before markets will realize that nothing has changed in Italy and that the inability of Italian politics to offer a serious and credible alternative to Berlusconi will not stop the economic collapse.
There is still the thought back in my mind that Berlusconi faithful to his reputation of a shameless crook will pull another trick of his, finding a way to turn this impasse to his advantage. Let's hope it will not be a delaying tactic to block the approval of the austerity package because Italy will be under deep scrutiny and any whiff of fraud will resume the spiral death of the Italian economy.
Furthermore the IMF is going to Rome this week to scrutinize the Italian books as previously done in Greece and we have to hope they will not find ugly surprises or black holes of debt courtesy of our fraudulent still to be Prime Minister Berlusconi.

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