Italy comes under bond market pressure as Berlusconi clings to power


Silvio Berlusconi shows the pressure at yesterday's Euro Summit in Brussels. There is no relief in sight for Italy's Prime Minister as his colleagues pile pressure on him to take the necessary steps to stave off a possible sovereign debt crisis in Italy.


Georges Gobet

The crisis never ends:

Markets opened today completely unappeased by the resignation announcement of Greek Prime Minister George Papandreou along with the formation of a coalition "unity" government.

Their focus has moved on to Italy where at the opening bell the interest rate on a 10-year Italian bond went to 6.66 percent, a 14 year high.

That number may change by the end of the day but what won't change is that Prime Minister Silvio Berlusconi will still be running the country for the foreseeable future. At least that's what he says. Yesterday, Corriere della Serra, one of Italy's leading newspapers ran an article claiming 20 members of Berlusconi's own party in the Italian parliament were asking him to step aside. Berlusconi dismissed the story as "gossip," or "palace chitter-chatter" as the FT's excellent Guy Dinmore put it.

Anyway, tomorrow is a possible test of Berlusconi's future when there is a crucial vote on public finances in parliament.

Of course, there are "crucial votes" on the Italian Prime Minister's future served up almost as frequently as plates of pasta in this wonderful but badly ruled country.

It was to be expected:

Uncertain economic times lead some people to look for outsiders to blame. In Europe it used to be the Jews, anti-Semitism was part of the deep-weave of European culture. Now there are virtually no Jews left in Europe so the outsiders of choice are Muslim immigrants. Xenophobia is on the rise as European economies flatline.

What's interesting about the current brand of right-wing populism is how it is spreading via social networks rather than political party propaganda machines. That's the finding of a new report by Demos, the London think-tank, published today. Findings are based on 10,000 responses to a survey conducted on line via Facebook and the other usual suspects. (Report can be downloaded from this page for free).