Italy: Credibility Is Not Everything
By Paolo Manasse, Professor of Macroeconomics and International Economic Policy at the University of Bologna
UPDATED: Changes in the Italian government are driven by the country's dire debt situation. This column, which updates a 31 October column that illustrated the unsustainability of Italian debt, argues that Berlusconi's departure is necessary but far from sufficient. Drastic, but evenly distributed measures of consolidation and reform are necessary.
Finally, Berlusconi's time seems to be over. A slow, but seemingly unstoppable landslide of rightwing MPs to the centre-left opposition is making it very likely that, next Tuesday, the government will lose its majority in a crucial parliamentary vote on the Stability Law. He may even resign before the vote.