Berlusconi Speech Falls Flat As Crisis Looms In Italy
Alarm is spreading through international markets as Italy, the eurozone's third largest economy, risks being sucked into the debt crisis. After a long silence, Prime Minister Silvio Berlusconi addressed Parliament — and insisted that the country's economy is strong, while rebuffing opposition calls for his resignation.
Weeks of market turmoil have raised the specter that Italy is facing a Greek-style financial crisis. Meanwhile, the country is in the grips of spiraling investigations into political corruption, and popular anger is rising over austerity measures that punish the middle class but not the wealthy.
Throughout, Berlusconi was mum — until Wednesday. And his words are not likely to calm markets.
Addressing Parliament, the prime minister insisted that the Italian economy is vibrant.
"The country is economically and financially solid," he said. "In difficult times, it knows how to stay together and confront difficulties. Today, more than ever, we need to act all together."
While Berlusconi acknowledged for the first time that there's an economic crisis, he blamed it on the global financial crisis. And although he pledged reforms, he offered few details, other than slightly cutting back the number of government-supplied cars for politicians and state authorities. There are currently nearly 700,000 that cost the state some $30 billion a year.
Economists say it'll take a lot more than that to bring down Italy's huge debt, equal to 120 percent of GDP.
Italy's biggest task is to stimulate growth, which has been essentially stagnant since the euro was introduced a decade ago. And the media mogul turned politician was met with boos when he boasted about his economic expertise.
"You are listening to a businessman who has three companies listed on the stock exchange and who is in the financial trenches, aware every day of what's going on in the markets," he said.
Stefano Folli, editorialist for the financial daily Sole 24 Ore, said the speech was disappointing "because it was too optimistic and lacked any specific proposals."
"It sounded like Berlusconi was saying the markets are mistaken. The markets are not mistaken, the problem is Italy is too weak and simply not credible," Folli said.
The Berlusconi government and the entire political class have lost credibility also among Italians. Magistrates have been opening up numerous investigations into wide-ranging political corruption — within both the ruling parties and the opposition.
And Italians are increasingly angry over lawmakers' unwillingness to make sacrifices like the rest of the population.
One of the most popular blogs is called the Secrets of the Parliamentary Caste, listing MPs' perks — such as free airline tickets, free access to swimming pools, gyms, theaters and cinemas, as well as discounted cars. MPs earn about $16,000 a month before taxes, and receive another $10,000 for expenses.
Gianantonio Stella, the author of an expose on the costs of Italian politics, says the MPs' token cutbacks are unacceptable.
"In a country where businessmen have committed suicide because they lost companies, where hundreds of thousands of workers have been laid off, a country whose growth is one-fifth of Germany's, frankly, a cutback of just 0.34 percent is simply too, too little," Stella said.
On Thursday, Berlusconi is due to meet business and union leaders — who have already voiced disappointment with the prime minister's speech on the state of the economy.
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