Romano Prodi, alleged to be the KGB’s head agent in Italy by Alexander Litvinenko in 2007 months before he was poisoned and silenced, has now resigned as Prime Minister of Italy for the 2nd time. The coalition of the left has collapsed. (Mario Scaramella who assisted Litvinenko make his revelations, is in jail in Italy accused of bringing Prodi into disrepute).
Berlusconi is waiting in the wings to seize power by forcing another election.
NPR reports –Berlusconi said his conservative lawmakers would veto any push for a “technocrat” government, an idea supported by lawmakers who want Parliament to enact reforms of the electoral system.
“We need to go to the polls in the shortest time possible without delay,” Berlusconi was quoted as saying by the Italian news agency ANSA.
But the leader of the largest party in the government, Rome Mayor Walter Veltroni, contended that early elections would only “push the country into a situation of dramatic crisis.”
Crisis is inevitable. The economy is stalled. Industrial production is falling. The consumer economy is going backwards, as the population decreases with the lowest birthrate in Europe, and with no confidence to spend.
The country is weighed down by debts. Under Prodi the hoped for improvement in the fiscal position has not transpired. Italian government debt is now the most expensive in Europe, priced at 45 basis points higher than German government debt, giving the lie to the theory that the Euro is a single currency.
If Berlusconi wins power, one option he will need to consider would be whether to quit the Euro. It the Euro bonds were repriced in Lira, Italy’s debts could be reduced by billions at a stroke. Italy could run its own economy again with lower interest rates, higher inflation, stimulate domestic demand and become competitive in world export markets all at once. Such a move must be a major temptation for Berlusconi.
The currency option was discussed at length in this paper explaining how quitting the Euro would work.
I guess this will all be talked about at California University Professor Barry Eichengreen’s Seminar in Stanford University next week, called The Collapse Of The Euro Area.