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Italian report Italian report
by Euro Reporter
2011-11-06 11:35:55
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Italy protesters rally against Berlusconi

Tens of thousands of demonstrators have gathered in Rome Saturday to voice their opposition to the government of Italian Prime Minister Silvio Berlusconi and its reforms. Many of the protesters, waving opposition party flags as they filled a central square in a peaceful rally, called for Berlusconi to step aside. Some say they want immediate elections, others the formation of a technocratic transitional government to guide Italy through the difficult months to come. Berlusconi said Friday at the G-20 economic summit that Italy had agreed to let the International Monetary Fund "certify" its reform program, a step designed to boost investor confidence.

But he faces a vote of confidence perhaps as soon as next week, amid criticism of his handling of Italy's economy -- and analysts say he may no longer have the support of a majority in parliament. A crucial vote on budget reform measures is expected in Rome Tuesday. Italy's President Giorgio Napolitano has warned of a "grave crisis of credibility" regarding Italy's commitment to reform and said structural reforms agreed to in Brussels last month must be implemented. International concern has focused on Italy -- the third-largest economy in the euro zone -- in recent weeks, amid concern that the financial crisis centred on Greece might spread. The ripple effects of a meltdown in Italy would be far more serious for the global economy than a collapse in Athens.

Although Italy's economy is in much better shape than that of Greece, borrowing costs for the Italian government rose to a euro-area high of 6.43% Friday, adding to the pressure. The nation has debts equal to about 150% of its economic output. There are growing fears, meanwhile, that Berlusconi's government no longer has the strength to push through the austerity measures needed to get the economy back on track. These include such steps as tax increases and rising the retirement age by two years to 67. Berlusconi, who has survived many confidence votes in the past, has said now is not the time to change the country's leadership.

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ECB debates ending Italy bond buys if reforms don't come

The European Central Bank often discusses the possibility ending the purchase of Italian government bonds if it concludes Italy is not adopting promised reforms, ECB Governing Council Member Yves Mersch said. "If we observe that our interventions are undermined by a lack of efforts by national governments then we have to pose ourselves the problem of the incentive effect," Mersch said according to extracts of an interview with Italian daily La Stampa to be published on Sunday. Asked if this meant the ECB would stop buying Italy's bonds if it did not adopt reforms it has promised to the European Union, Mersch, who heads Luxembourg's central bank, replied: "If the ECB board reaches the conclusion that the conditions that led it to take a decision no longer exist, it is free to change that decision at any moment. We discuss this all the time."

Since the ECB resumed its bond buying programme (SMP) around three months ago it has purchased some 100 billion Euros of government bonds, a majority of which are thought to be Italian BTPs. Mersch said the ECB did not want to become a lender of last resort to help the euro zone solve its debt crisis and said it was concerned that its job could be made more difficult by governments that "don't meet their responsibilities."

"Our job is not to remedy the errors of politicians," he said. Mersch also defended the right of Italian Lorenzo Bini Smaghi to remain on the ECB board even though this means Italy now has two members and France has none, much to the annoyance of French President Nicolas Sarkozy. "He (Bini Smaghi) has an eight year mandate, the treaties do not say that if someone comes from a specific Treasury ministry he has a right to a place on the ECB board," he said. "The spirit of the treaties is that everyone leaves his passport in the wardrobe when he participates in ECB meetings."

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Italy invites in IMF as debt woes loom


Italy has invited inspectors from the International Monetary Fund to supervise efforts to reduce its 1.9-trillion-euro debt pile - an amount which is 1.2 times the value of its annual economic output.
The unprecedented move by Prime Minister Silvio Berlusconi came as he rebuffed calls for his resignation over his failure to implement reforms to pensions, labour laws and state privatisations. Reforms are needed to prevent Italy from becoming the fourth eurozone nation to need a financial rescue. Mr Berlusconi also said he had turned down the offer of a precautionary IMF loan.

"We have gone to Madame Lagarde, Director of the International Monetary Fund, and we have asked that the fund may monitor and publicly certify every three months the progress of our reforms.”So that we can show the markets, using the authority of the IMF, that the Italian government is making progress in the implementation of the reforms," Mr Berlusconi said after the G20 summit in the southern French city of Cannes. IMF chief Christine Lagarde said: "We will be checking the implementation of the commitments that have been made by Italy under the 15-page commitment that it has made to members of the eurozone a couple of weeks ago, so it is verification and certification if you will of implementation of a programme that Italy has committed to."

Mr Berlusconi said he was confident his austerity measures would be enough to bring Italian public finances under control: "Maybe we have made mistakes in the past in thinking that our economy could have easily handle our debt and we have therefore used our public money in a different way.”But as soon as we were made aware of the need for debt reduction, we immediately approved in the summer our commitment to balance our books by 2013 and not 2014, as we had initially intended and we will continue with decisiveness in this direction."

Mr Berlusconi is battling a coup within his ruling coalition amid scepticism over his ability to manage Italy's debt crisis and has refused to resign. The 75-year-old media tycoon is widely believed to have lost the numbers he needs to survive in parliament but having described rebels within his PDL party as "traitors" he said they would return to the fold once he spoke to them. His finance minister, Giulio Tremonti, refused to answer when asked if he shared the prime minister's confidence in the government's survival.




        
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Emanuel Paparella2011-11-06 14:18:47
What did Kissinger say, "power is the ultimate aphrodisiac." Since Berlusconi is now 75 and probably needs Viagra as well as face lifts to buttress his macho image with the ladies and undeage teens, he will not let go of power very easily. What would he do with his life without power? Marx was mistaken in severla of his analysis but he was right in one: nefarious mediocrities with power will have to be deposed by the people and with a revolution if necessary, given that they will have managed to corrupt even democracy for their own corrupt agenda.


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