News / Europe

Markets Calming as Italy Approaches Unity Government

Former EU Competition Commissioner, economist Mario Monti (file photo)
Former EU Competition Commissioner, economist Mario Monti (file photo)
Henry Ridgwell

Italy's Senate rushed to pass laws that clear the way for establishing a new government in a bid to restore confidence in Europe’s second-biggest debtor.  The new administration may be led by former EU Competition Commissioner Mario Monti, - a man markets appear to trust.

This morning’s headline on Italy’s leading financial newspaper, Il Sore 24 Ore, read simply ‘Hurry Up.’

With Italy in the eye of Europe’s financial storm, investors want a quick solution. So indications that Prime Minister Berlusconi may step aside within days and give his backing to a national unity government, was a rare piece of good news for the markets, which reversed their two-day losing streak.

Economist Nicola Borri of the International University of Social Studies in Rome, says Italy’s politicians need to act fast.

“First thing is, we need to implement the structural reforms that will be able to increase the growth rate of our economy," said Borri. "Our problem is a long term problem - the fact that we are not growing, and if we do not grow we are not going to be able in the future to pay our debt, and that is what markets fear.”

Italy’s 10-year bond yields, effectively the interest rate the country must pay on loans, stabilized around seven percent, still barely sustainable.

Rome also paid less to sell one-year treasury bills than many had predicted. The markets’ short-term fear, says Borri, is political instability.

“Right now our political arena is crazy," he said. "We all know that Berlusconi has ‘almost’ resigned, we do not know what is going to happen after, if we are going to have elections, if we are going to have a grand coalition government, so we need more clarity on that.”

One man has emerged who might lead such a coalition government, former European Union Competition Commissioner Mario Monti - the current favorite to take over as a so-called ‘technocrat’ leader to steer Italy into calmer waters.

Analyst Nicola Borri says Monti is a respected economist who should have a calming effect.

“Markets know what he has in mind," said Borri. "He has in mind I would say two or three big reforms that I would say most economists agree Italy desperately needs, but it seems neither the left nor the center-left nor the right or the center-right are able to implement.”

Analysts say that political deadlock will have to be loosened for Italy’s long-term stability.
Silvio Berlusconi retains considerable support for both his style of governance and character.

“Berlusconi is the captain if the ship and the left party wants to sink the ship," said Alessandro Stuart, assistant to the head of the Rome cabinet which is led by Berlusconi’s party. "What they do not realize is that we are all on the same ship because they have never worked like us normal people.  Without a captain like Berlusconi Italy cannot move forward.”

But with Berlusconi already vowing to step down, analysts say Italy must act quickly to appoint a successor if the country is to be saved from Europe’s debt storm.

You May Like

US Imposes Sanctions on Alleged Honduran Drug Gang

Treasury department alleges Los Valles group is responsible for smuggling tens of thousands of kilograms of cocaine into US each month More

At 91, Marvel Creator Stan Lee Continues to Expand his Universe

Company's chief emeritus hopes to interest new generation of children in superheroes of all shapes and sizes by publishing content across multiple media platforms More

Photogallery New Drug Protects Against Virus in Ebola Family

Study by researchers at University of Texas Medical Branch, Tekmira Pharmaceuticals is first looking at drug's effectiveness after onset of symptoms More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
African Media Tries to Educate Public About Ebolai
X
George Putic
August 20, 2014 8:57 PM
While the Ebola epidemic continues to claim lives in West Africa, information technology specialists, together with radio and TV reporters, are battling misinformation and prejudice about the disease - using social media to educate the public about the deadly virus. VOA’s George Putic has more.
Video

Video African Media Tries to Educate Public About Ebola

While the Ebola epidemic continues to claim lives in West Africa, information technology specialists, together with radio and TV reporters, are battling misinformation and prejudice about the disease - using social media to educate the public about the deadly virus. VOA’s George Putic has more.
Video

Video Ferguson Calls For Justice as Anger, Violence Grips Community

Violence, anger and frustration continue to grip the small St. Louis suburb of Ferguson, Missouri. Protests broke out after a white police officer fatally shot an unarmed black teenager on August 9. The case has sparked outrage around the nation and prompted the White House to send U.S. Attorney Eric Holder to the small community of just over 20,000 people. VOA’s Mary Alice Salinas has more from Ferguson.
Video

Video Beheading Of US Journalist Breeds Outrage

U.S. and British authorities have launched an investigation into an Islamic State video showing the beheading of kidnapped American journalist James Foley by a militant with a British accent. The extremist group, which posted the video on the Internet Tuesday, said the murder was revenge for U.S. airstrikes on militant positions in Iraq - and has threatened to execute another American journalist it is holding. Henry Ridgwell has more from London.
Video

Video Family Robots - The Next Big Thing?

Robots that can help us with daily chores like cooking and cleaning are a long way off, but automatons that serve as family companions may be much closer. Researchers in the United States, France, Japan and other countries are racing to build robots that can entertain and perform some simpler tasks for us. VOA’s George Putic reports.
Video

Video In Ukraine, Fear and Distrust Remain Where Fighting has Stopped

As the Ukrainian military reclaims control of eastern cities from pro-Russian separatists, residents are getting a chance to rebuild their lives. VOA's Gabe Joselow reports from the town of Kramatorsk in Donetsk province, where a sense of fear is still in the air, and distrust of the government in Kyiv still runs deep.
Video

Video Five Patients Given Experimental Ebola Drug Said to Be Improving

The World Health Organization has approved the use of experimental treatments for Ebola patients in West Africa. The Ebola outbreak there is unprecedented, the disease deadly. The number of people who have died from Ebola has surpassed 1,200. VOA's Carol Pearson reports on the ethical considerations of allowing experimental drugs to be used.
Video

Video China Targets Overseas Assets of Corrupt Officials

As China presses forward with its anti-graft effort, authorities are targeting corrupt officials who have sent family members and assets overseas. The efforts have stirred up a debate at home on exactly how many officials take that route and how likely it is they will be caught. Rebecca Valli has this report.
Video

Video Leading The Fight Against Islamic State, Kurds Question Iraqi Future

Western countries including the United States have begun arming the Kurdish Peshmerga forces in northern Iraq to aid their battle against extremist Sunni militants from the Islamic State. But there are concerns that a heavily-armed Kurdistan Regional Government, or KRG, might seek to declare independence and cause the break-up of the Iraqi state. As Henry Ridgwell reports from London, the KRG says it will only seek greater autonomy from Baghdad.
Video

Video In Rural Kenya, Pressure Builds Against Female Circumcision

In some Kenyan communities, female genital mutilation remains a rite of passage. But activists are pushing back, with education for girls and with threats of punishment those who perform the circumcision. Mohammed Yusuf looks at the practice in the rural eastern community of Tharaka-Nithi.

AppleAndroid