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Berlusconi’s Exit Does Little to Calm Fears on Italy’s Debt

November 9, 2011 at 12:00 AM EDT
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JEFFREY BROWN: First Greece and now Italy — fears that Europe’s debt crisis has taken a new turn for the worse drove markets down today. The Dow Jones industrial average lost 389 points, 3 percent, to close below 11,781. The Nasdaq fell more than 105 points to close at 2,621.

Investors were shaken by the collapse of power-sharing talks in Greece. And they were not reassured by news that Italy’s longtime and often-controversial prime minister will step down.

We begin with James Mates of Independent Television News, reporting from Rome.

JAMES MATES: Any hopes that Silvio Berlusconi’s slow-motion departure last night would calm the money markets were dashed within minutes of the opening, as the interest rate the Italian government must pay to borrow money shot above 7 percent, a level the experts had long predicted would send Italy begging for a bailout.

FRANCO PAVONCELLO, John Cabot University: The issue is, is the Italian political system going to be able to strengthen the image, the political image, the political system of this country? I think they might, but they better run fast, because things are not getting any better. They’re actually getting worse.

JAMES MATES: But with a team of E.U. inspectors now here in Rome to oversee the economic policy of another supposedly sovereign government, everyone knows there is simply not enough money to bail out the world’s eighth biggest economy.

As they changed the honor guard outside the Quirinale Palace this morning, Italy’s president, normally a largely ceremonial figure, was urging the country’s politicians to get a move on. “We must act now,” he said, “if we are to escape from this very dangerous situation.”

And a senior opposition politician told me they are trying to heed his words.

STEFANO FASSINA, Italian opposition spokesman: We are trying to have the budget law approved by Sunday, or Monday at the latest.

JAMES MATES: So that then Mr. Berlusconi will resign, and do you think that will be the end of the crisis?

STEFANO FASSINA: That will be the end of the Berlusconi part of the crisis. Then we need to either try to form another government with a large majority in Parliament or very quickly to have elections.

JAMES MATES: It is traditional in Rome to throw a euro into the Trevi Fountain and make a wish. It’s not much of an economic policy, but right now, it does seem as good as any.