Italy is in tatters and Mr. Berlusconi has decided to step down as the PM. This is the most intelligent decision taken by him. I strongly believe that Italy still stands a chance. Saving rate of Italy is high and government tax recipients are not too dependent on property and stuff. What Italy currently needs is a sound leader to put the confidence of the investor’s back in the country. During Silvio’s regime the economy of Italy grew miserably (faster than Haiti and Zimababwe only). If Europe wants to survive the crisis it becomes imperative to save Italy and for Italy to succeed a lot of things has to fall in place all at the same time and with collective approach this can be achieved.
Currently the situation of Italy does not look good, the bond yield has reached the danger level 7.5% which can put the whole Italy into Insolvency. If the 3rd largest bond market starts to buckle it will bring down anything and eveything you can think of. Markets sentiments must be controlled which are becoming haywire after the news that LCH Clearnet has raise the margin call for anyone dealing in Italian bond markets and the talks that they are contemplating a new club of euro countries have the capability live within the rules, and leaving the rest. ECB is sending some signals that it will step in to ease the Italian bond market but news and chats like these will kill the attempts of pacifying the market.
Everything seems a bit hazy right now but if ECB, France and Germany and the most important people of Italy, if they all stand firm on the ground for saving the Euro this daunting target can be achieved.