Following consultation with Italy’s President, Prime Minster Berlusconi announced this evening he will indeed resign. Berlusconi said, he will step down as soon as Italy’s parliament approves a Euro-zone member demanded austerity budget, sometime in the middle of next week.
Italy’s spending cuts are an absolute necessity, with the country saddled by a $1.9 trillion debt load. Although Italy has the Euro-zone member third largest economy, the country simply cannot be bailed-out like a Greece, or in coming weeks Ireland or Portugal, Italy’s debt burden is too large.
What is an unknown for Italy at this time, when all budget austerity measures have taken place, will they be if they be sufficient for Italy to pull out of an economic nose dive? What is known however, that unlike the Greeks, Italy’s population, albeit unhappy, has not taken to the streets in large strikes against the government. More complacent, they seem to understand change had to come. Likewise, Berlusconi, who by now recognized he may be the problem and a realization, he had to go.
The 17 member Euro-zone is not out of the woods yet, they still need to tackle Portugal in a second bail-out, as well as Ireland and its runaway deficit spending. Even after all of that has been resolved, Spain looms on the horizon.
It almost seems better and certainly much less expensive for Euro-zone countries to settle on a smaller Euro-zone scale consisting of countries capable of carrying their own debt load.