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December 12, 2012

The Ghost of Berlusconi Rises Again

Kevin E. Dayhoff

While Greece wraps up a six-month effort to secure a new bailout payment, and Washington continues to fail to understand the seriousness of its fiscal responsibilities, the world’s financial markets wobbled earlier in the week when it saw the ghost of Italy’s former Prime Minister Silvio Berlusconi.


Yes, to be certain, the financial markets continue to suffer from having the attention span of a goldfish.


Most any headline has the potential to rattle the markets, but for the easily amused political junkie, Emma Wallis said it best on Tuesday in an article, “Italy, the eurozone detonator,” in Deutsche Welle: “As markets wobble as Monti announces resignation and Berlusconi prepares for a comeback, could Italy be the detonator which blows the Eurozone?


“It doesn't take much to spook the markets these days, so news that Italy's interim Prime Minister Mario Monti was set to resign after he lost the support of Berlusconi's People of Freedom Party was bound to wobble them. And wobble they did.”


You know, you can’t make this stuff up. Yes, I understand that on the other side of the planet – in more ways than geopolitical – Japan’s former prime minister, Shinzo Abe, is (deservedly) poised for a comeback; but for sheer entertainment, nothing beats the return of Italy’s Mr. Berlusconi.


USA Today certainly chose not to mince words Tuesday when it ran a headline, “Disgraced ex-PM Berlusconi seeks comeback in Italy.” For those following the perpetual Italian reality TV, “Burlesque Berlusconi,” USA Todaywriter Eric J. Lyman reminds us as to what has helped precipitate the current Italian fiasco. “Prime Minister Mario Monti said Monday that he will remain in the post only long enough for a new government to take power. Monti is leaving because Berlusconi's People of Liberty Party, Parliament's largest, withdrew its support for his economic policies.”


If you will recall, Italy’s current prime minister, Mr. Monti, “was appointed prime minister to clean up after the government of Mr. Berlusconi in November 2011. In the 13 months since, an unelected government has curbed the deficit and restored stability and predictability to Italy’s government, almost halving its borrowing costs,” according to an insightful commentary by the editors of Bloomberg last Monday, “Full Monti Won’t Help Italian Voters.”


For those who would rather forget, in October Mr. Berlusconi “was sentenced to four years behind bars for tax evasion, and he remains on trial in another case alleging abuse of power and paying a 17-year-old girl for sex…” according to USA Today.


As the New Year approaches and the planet heaves forward into the sixth year of never-ending economic chaos, it is apparent that the greatest hoax for the global financial markets continues to be the hope for safety.


From one end of the globe to the other, the financial picture features only shades of grey and despair. Argentina is once again teetering on the brink of a technical default. Japan, China, and India stagger-about on the Pacific Rim and Southeast Asia stage.


For the Argentina segment of the world’s fiscal soap opera, The Washington Post reported November 28 that a New York appeals court set “a Feb. 27 date for oral arguments...” A stay by the appellate court averted “a December 15 deadline for a $1.3 billion payment that Argentina has refused to make despite losing its case against NML Capital Ltd., an investment fund that specializes in suing over unpaid sovereign debts.


“Judge Thomas Griesa had ordered the government of President Cristina Fernandez to pay the money into an escrow account even as it pursued its final appeals.”


Further destabilizing the world stage is the new government in Egypt, which is proving to be the powder keg the Middle East does not need these days as the new President Mohamed Mursi lurches from one blunder to the next.


The editors of Bloomberg shed additional light on Egypt in a December 6 commentary, “Mursi and His Opponents Must Both Back Down to Save Egypt.” Bloomberg begins with an opening line, “The ability to lose gracefully is an element of a healthy political system so far lacking in Egypt’s nascent democracy.


One may only imagine certain individuals in Egypt conjuring-up billboards depicting a smiling Hosni Mubarak, the former president of Egypt, with the caption “Miss me yet?”


“Mursi went far too far last month when he acted to prevent the judiciary from dissolving the constitutional assembly, granting himself authority ‘to take any measures he sees fit’ to safeguard the country,” writes Bloomberg.“He has promised to revoke the decree once a constitution has been approved. Yet that amounts to blackmailing Egypt’s voters. Essentially he’s saying: Approve the draft constitution or you’re stuck with me as dictator.”


Meanwhile, in Japan, Mr. Abe “faces a shrinking economy, diplomatic tensions with China and the aftermath of a nuclear meltdown. With successive prime ministers seeing initial public support evaporate, he would also need to manage the expectations of a disillusioned electorate that’s seen five heads of government since Abe, 58, was last in office,” writes Isabel Reynolds & Takashi Hirokawa, last Monday, in “Abe Poised for Second Turn at Helm as Japan Contracts.”


Back “In the U.S., lawmakers from both parties are leaving rhetorical room for a split-the-difference agreement with President Barack Obama on a U.S. budget deal,” according to Rita Nazareth & Adria Cimino. “The president and House Speaker John Boehner met one-on-one yesterday at the White House, with representatives for the two leaders offering no details of the negotiations, yet issuing identical statements afterward that “the lines of communication remain open.”


As the beginning of the year 2013 looms large on the calendar, many on the world’s stage are hoping that some economic safety may arise from one of the more unlikely sources, the United States.


One can only hope.


… I’m just saying……


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