Berlusconi’s eventual departure cheers Italians, but not markets
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Steve Chiotakis: Interest rates on Italian bonds have reached a mark that economists worry about. The yield on 10-year Italian debt is now above 7 percent — a point where other European countries have had to ask for help in paying off their debts.
The Italian prime minister Silvio Berlusconi is soon expected to step down, after the country implements economic reforms. We’re gonna get the latest reaction about all of this from Rome. And Marketplace Europe correspondent Stephen Beard is there for us this morning.
Stephen, how are Italians feeling today with the news that Berlosconi’s on his way out?
Stephen Beard: The mood seems to be mostly one of relief. I mean, generally, out on the streets of Rome people seem relieved and happy that he’s going. There are some Berlusconi die-hards who say he was betrayed, he was stabbed in the back — but most people seem pleased.
One political scientist said to me this morning, the Italians turned a blind eye to his sexual misdemeanors and possible crimes, and his alleged corruption — but they weren’t going to put up with him dragging down the Italian economy. So they hope that his departure will lift the economic storm clouds.
Chiotakis: All right, so Italians are a bit cheery about this, but the markets aren’t so much. Why the disconnect then, Stephen?
Beard: Analysts and observers here in Rome say it’s because Berlusconi has only said he’ll go after he’s passed the austerity and economic reform measures. He hasn’t made a quick and clean exit.
Here’s Franco Pavoncello of John Cabot University.
Franco Pavoncello: I think that what the market is feeling today is that we are worse off today than we were yesterday, because, you know, there is neither Berlusconi smashing his opponents, or Berlusconi out of the picture. So that is the worst possible outcome that you could imagine for the country today, and we are paying the consequences.
He says it could take until Christmas to pass the measures through the Italian parliament, and markets can’t wait that long.
Chiotakis: Marketplace’s Stephen Beard, on the ground in Rome for us. Stephen, thank you.
Beard: OK, Steve.
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