On Friday, Nov. 12 embattled Italian Prime Minister Silvio Berlusconi submitted his resignation to the president of Italy, Giorgio Napolitano and became a caretaker prime minister in the interim. This comes on the heels of multiple problems for Italy as the three term premier of Italy resigned from leading a country with bulging debt, a slow growing economy and personal sex scandals.
Protestors, mostly youth, were celebrating in front of the presidential palace in Rome were marking the end to an era which seemed to never come to an end. The 75 year old business mogul is one of the world’s richest men and has control of the three of Italy’s media companies.
He had survived 53 no confidence votes throughout his tenure and had formed a strong conservative wing coalition.
Earlier in the week Italy was deemed to “big to bail out” by the European Union after it had bailed out Greece, Portugal, and Ireland. This had serious repercussions for the third largest economy in the European Union after Germany and France.
The problems of Italy stem from its huge deficit in its budget and the fact that the government under Berlusconi was slow to implement austerity measures that would have managed the country’s $2.6 trillion debt and better positioned it against its Greek neighbors. The new premier Mario Monti has the task of getting Italy’s economic house in order and restoring investor confidence in Italian bonds which have been selling at lower yields or potential returns on investments in those bonds. The new Prime Minister, Monti is a well-respected economist and has a strong reputation but will need the support of Berlusconi to have some legitimacy as he prepares an opposition led government to pass on austerity measures which will hurt and cut in deep to the finances of the average Italian. It would also require the government to stop protecting older workers in dying industries at the expense of younger workers trapped in lower wage industries which are not as productive.
The Italian economy has been stagnant in the third term of Berlusconi (2008-2011) which has seen no improvement of late and continues to titter on the brink of a recession which then could plunge the European Union into an economic meltdown and potentially the United States. Mario Monti is known as a man who uses “un Italian” ways to go about business in reference to his very vigorous and almost undiplomatic methods to achieve his ends may need to do that as he negotiates with the European Union on terms to bail or restructure the Italian economy and get it to start growing again and on the part towards more prosperity.
Although a first world country, Italy has not been able to adjust to the changing world economically as it has been left behind in terms of Gross Domestic Product (GDP) per person.