Attempting to demonstrate that both he and his majority in the Italian Parliament have the power, Italian Prime Minister Silvio Berlusconi pledged to pass a balanced budget amendment to the Constitution and, in fact, balance the Italian budget by 2013. Famous for labor laws and business regulations that stifle economic activity, he also promised reform. On that you should not hold your breath. Thoughts:
• Berlusconi is the youngest looking old leader in Europe.
• Italy’s government, even under an embalmed leader and weak party, appears more capable of action than the U.S.
• Mostly Italy’s current financial run is based on speculation and not fundamentals. Hence, political action combined with public relations is as important as anything the EU does. And, frankly, no one believes the EU has the will or money to help Italy if it really begins to fall apart.