Europe’s debt crisis topples two governments

The eurozone’s debt crisis shifted from Greece to Italy, and caused both the Greek and Italian prime ministers to step down from office.

What happened

Italian Prime Minister Silvio Berlusconi and Greek Prime Minister George Papandreou were forced to announce their resignations this week, as European leaders struggled to contain the eurozone’s accelerating debt crisis. The focus of concern has shifted from Greece to far larger Italy, the European Union’s second-most-indebted country, where an embattled Berlusconi finally pledged to step down after failing to secure a parliamentary majority on a key budget vote. But the prospect of his departure failed to calm market fears that Italy will soon be unable to pay its debts. Government bond rates soared past 7 percent, the level at which Greece, Ireland, and Portugal requested bailouts. With $2.6 trillion in total government debt, Italy is seen as simply too big for the EU to bail out. Berlusconi cast his exit, which he said would come as soon as austerity measures are passed, as a way to restore markets’ faith in his country, but it hasn’t done so yet. “We have to show markets that we’re serious,” Berlusconi said.

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