The return of Silvio Berlusconi: Is the euro in trouble again?
Mr. "Bunga Bunga" is back
Silvio Berlusconi, the former prime minister of Italy, just doesn't seem to get the hint. Mere months after Berlusconi was publicly shamed by a fraud conviction, this weekend his People of Liberty party withdrew its support for Berlusconi's successor, Mario Monti, forcing new elections in February in which Berlusconi will try to return to power. The prospect of Berlusconi's resurrection drew barely suppressed cries of "Mamma mia!" in capitals across Europe, with many fearing he could derail a slate of belt-tightening reforms Monti had pushed through to shore up Italy's finances. Berlusconi has been accused of a lot of things — including having sex with an underage prostitute and engaging in numerous acts of corruption — but now commentators are beginning to suspect that he's not even human, say Carsten Vokery and Philipp Wittrock at Germany's Der Spiegel:
The markets were even less pleased. After months of relative calm, Italian borrowing costs shot up, sparking fears that the country's financial troubles could return. "The ability of Silvio Berlusconi to spook investors knows no bounds," Nicholas Spiro, managing director of Spiro Sovereign Strategy, tells Bloomberg Businessweek. "He epitomizes the dysfunctional nature of Italian politics, with its discredited leaders and unstable governments."
There are even concerns that fresh political turmoil in Italy could plunge the entire eurozone back into crisis mode. While many have noted that Berlusconi's party remains unpopular, and that he has only a slim chance of becoming prime minister once more, populist forces unleashed by the election could still awaken bond market furies that have been lulled in recent months. In essence, Berlusconi's campaign could "put Italy's fate back into the hands of speculators," say Vokery and Wittrock.
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However, there are signs that a strengthened Europe can withstand an element as volatile as Belusconi. Markets reacted negatively to the news, but they didn't panic, says Neil Irwin at The Washington Post:
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Ryu Spaeth is deputy editor at TheWeek.com. Follow him on Twitter.
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