Posted by AzBlueMeanie:
This melodrama is starting to sound like an episode of Rocky and Bullwinkle: "Last week our heroes teetered on the edge of a no confidence vote and clung to a referendum on the European bailout for Greece… Will our heroes survive? Or will they be tossed like a Greek salad? Tune in next week…"
In this week's episode, Prime Minister George Papandreou has survived the no confidence vote, but will step down just as soon as a new government can be agreed upon with elections to be held in February.
And that referendum on the European bailout? Eh, not so much. Papandreou reversed himself on the bailout referendum after European leaders told him that he was jeopardizing Greece’s future in the euro zone. In Greece, no agreement on a new prime minister – The Washington Post:
Greece’s two largest political parties negotiated into the night Monday to choose a new prime minister to stabilize the country, but no agreement had been announced by the end of the day.
As the two sides bargained, they were urged to act by European finance ministers, who met in Brussels to discuss the mounting debt problems facing some of the continent’s biggest countries.
* * *
Prime Minister George Papandreou … was expected to resign as soon as his successor was named.
* * *
Two academics were floated as possible successors to Papandreou in Greek media reports Monday: Lucas Papademos, 64, a former vice president of the European Central Bank, and Nikiforos Diamandouros, 69, currently ombudsman of the European Union. Both would be bridges between the European Union and Greece, and neither is seen as especially partisan.
* * *
Greece still faces many hurdles, including — most important for Europe — passing the Oct. 27 bailout plan through Parliament with 180 of 300 deputies supporting it, something the two main parties have committed to do.
European officials said Monday that no new bailout money will be given to Greece until the plan is approved. The Greek government has said that it will run out of funds by mid-December without assistance.
* * *
The next months will present a difficult test for a temporary government that comes to power in the middle of a raging financial crisis. While the forced marriage of the two major political parties could produce deeper support for unpopular reforms, squabbling between them could also hamper their ability to act quickly should the situation demand it, analysts said. In addition, they said, elections scheduled for Feb. 19 will leave little time before politics takes an even larger role than it has thus far.
* * *
Analysts cautioned that Greece could still wind up running aground. The two main political parties have been bitterly at odds for years, and past unity governments give little reason for hope.
It may already be too late. The dominoes are starting to fall, with the Italian government next in line:
[The] challenges could deepen as Italy edges to the brink of debt troubles. Some analysts said Europe’s hard line on Greece last week was intended to send a message to Italian Prime Minister Silvio Berlusconi that he needs to implement painful reforms of his own if his country is to survive its economic turmoil. Italy is the world’s eighth-largest economy — more than six times as large as the Greek economy — and Italian debt is among the most widely held in the world, meaning that any trouble paying it could make Greece’s struggles pale in comparison.
It's not looking good for our heroes Rocky and Bullwinkle in Italy. Italy’s Berlusconi loses political support amid mounting debt crisis – The Washington Post:
With Italy on the brink of a full-blown debt crisis, Prime Minister Silvio Berlusconi’s political support appeared to be crumbling Tuesday, ratcheting up pressure on the embattled 75-year old media tycoon to quickly resign.
In a highly anticipated parliamentary showdown, Berlusconi won a budget vote on Tuesday but only after the opposition abstained. The result showed that political defections among his own supporters had left him roughly eight votes short of a majority in parliament, leaving him vulnerable to a no-confidence vote that could be forced on him by the opposition as soon as Wednesday.
“I ask the premier to finally accept the reality of the situation and offer his resignation,” Pier Luigi Bersani, head of the opposition Democratic Party, said after the vote. “If he doesn’t, we will take the necessary measures. We cannot go on like this.”
The bruising vote came after one of Berlusconi’s most formidable political allies — Umberto Bossi of the right-wing Northern League, part of Berlusconi’s ruling coalition — took the extraordinary step Tuesday of calling for the prime minister’s resignation. The move increased the prospect that Berlusconi, the ultimate political survivor who has won more than 50 confidence votes over nearly two decades in power, could soon become the highest-profile political victim of Europe’s roiling debt crisis.
* * *
“At this point, Berlusconi does not have any mandate, and his political willfulness to stay on is jeopardizing the ability of Italy to pass these reforms and get through this crisis,” said Giuseppe Ragusa, a professor of economics at Luissa University in Rome. “It isn’t good for Italy.”
Even as he struggled to retain power, his larger nation was overtaking Greece as the focus of Europe’s debt crisis. On Tuesday, worried investors continued driving up Italy’s borrowing costs — to more than 6.7 percent in early morning trading — bringing the nation closer to levels that — once crossed by Greece, Portugal and Ireland — led to a quick erosion of confidence that triggered international bailouts.
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Should Italy, which has amassed more than $2.6 trillion in debt, fail to quell the rapid escalation of borrowing costs, the impact could greatly worsen the already bleak outlook for the global economy. Italy’s bonds are among the most widely held in the world. Any hint that they might not be worth their promised value could shatter confidence in the ability of other indebted governments, particularly in Europe, to make good on their obligations.
* * *
Italy’s sheer size — its economy is bigger than Russia’s or India’s — would test the resources of euro-zone nations and the International Monetary Fund to come up with a bailout large enough to prevent a financial fall of Rome.
Sensing the urgency, finance ministers from the 17 nations that share the euro vowed on Monday to hash out the details of an expanded rescue fund within weeks, even as analysts suggested that the effort could fall far short of the region’s growing need.
* * *
Berlusconi, a political Houdini, may again manage to survive, as he has countless times before. Italy’s opposition appeared to be weighing whether to force a no-confidence vote this week. If they opt for restraint, the prime minister has said that he will call such a vote on Nov. 18, when Parliament is set to consider a promised set of economic reforms.
But many here see a script being written that, in the coming days or weeks, could become Berlusconi’s final act.
"Will the fat lady sing in this Italian Opera? Is it curtains for our heroes? Tune in next week…"
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