The Italian Job

Prime Minister Silvio Berlusconi is no stranger to controversy and public pressure. That may very well be his middle name. Somehow he survives, or maybe the Italians let him “slide.” Depending on who you ask, Berlusconi is the last person to be Prime Minister or anything, let alone a country whose economy is pivotal to the survival of the European Union as a whole – and by that extension, the rest of the world.

Everyone thought Berlusconi was on the verge of resignation, and a critical vote today was supposed to be the straw that breaks the camel’s back; but somehow the camel is still walking. It is too early to assess the economic ramifications of the Italian parliamentary vote, just as it is premature to speculate how much longer Silvio will ride this ship before his coalition falls apart, and is thrown out of power.

With what we know, Italian government's borrowing costs continue to rise. Yields on Italy's 10-year bonds [an indicator of how the viable the economy is over the long-term] is sitting at an unsustainable 6.71 percent. Key word is “unsustainable.”People who know anything will tell you that Italy’s debt is the catalyst for the economy’s self-inflicted turmoil.

[Allow me to digress] Just last week, all eyes were on Greece, and the highly publicized “50% haircut.” On the grand scale, the EU can afford to babysit Greece until it s economy solves –or even pretend to care about- fundamental economic problems.

Italy is a different story. There is no bailout cash in store, and as the third largest economy in the EU, its debt crisis is sure to give Angela Merkel and Nick Sarkozy sleepless nights. That is the only reason why most pro-Euro zone onlookers think Silvio Berlusconi is part of the problem, not the solution.

Breaking news from Reuters – “A key vote in Italy's Chamber of Deputies indicated Berlusconi has lost his parliamentary majority, piling further pressure on him to resign.”

The fact remains that Berlusconi’s 308 votes, was below the absolute majority he needed in the in the 630 seat Chamber. Whether or not that is enough proof of the country’s no-confidence is a different question.

At the end of the day, there are protesters calling for Berlusconi to quit. Others are pushing for technocratic transitional government to steer Italy through the turmoil and the economic mishmash it finds itself in.

Maybe the Italians will shock the world this time, but if Silvio Berlusconi survives this latest uncertainty and public anxiety, don’t be the least surprised. This is familiar territory.