On Tuesday, colorfully controversial Italian Prime Minister Silvio Berlusconi agreed to resign, as soon as lawmakers pass an austerity plan intended to keep the floundering southern European nation from defaulting on its debts. Berlusconi, long dogged by sex scandals and corruption charges, is considered a major cause of the country's political gridlock, and news of his promised departure sparked a brief rally in world markets. But stocks plunged early Wednesday as investors continued to worry about Italy's uncertain future. Will replacing Berlusconi make it easier to pull Italy — and Europe — back from the brink of collapse?
No. Italy's problems are bigger than Berlusconi: "Ousting Silvio Berlusconi won't make Italy's fiscal mess any easier," says Peter Morici at The Street. "With or without him, its debt is impossible and Italy is headed for default." Italy has borrowed so much money to pay for its extensive social benefits — its total debt is now 130 percent of GDP — that no budget cuts, no matter how deep, will "bring its books into balance. It is simply too late."
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