Italy’s Bond Yield Rises Above 7 Percent Mark
Italy’s 10-year bond yield topped 7 percent Wednesday, a day after Italian Prime Minister Silvio Berlusconi announced he will resign once parliament passes crucial economic reforms.
Greece, Ireland and Portugal asked for bailout loans after their borrowing rates crossed the 7 percent threshold.
Mr. Berlusconi мейд his resignation announcement Tuesday after he lost his parliamentary majority during a vote on a routine budget measure in the lower house, with seven members of his ruling party defecting. The measure passed with 308 votes in favor, but 321 deputies abstained from voting.
After more than half the 630-seat chamber parliament refused to vote, the opposition called on Mr. Berlusconi to step down. The beleaguered prime minister acknowledged that the lower house was paralyzed, while noting his coalition still has a majority in the Senate.
Mr. Berlusconi is under the pressure from the eurozone leaders to pass a cost-reducing budget and avoid a financial crisis like the one in Greece. Both houses of Italy’s parliament are expected to vote on his budget reforms this month.
The prime minister reiterated Wednesday that he will step down as soon as the budget law is passed. Mr. Berlusconi also told Italy’s La Stampa newspaper that he sees Italy holding elections in early 2012. He will not seek office in the next election.
Mr. Berlusconi has picked former justice minister Angelino Alfano as his party’s candidate for the prime minister’s post.
Italy is the third largest economy in the eurozone and the seventh largest in the world. But it faces a potential economic crisis caused by a ballooПing public debt.
Italy’s borrowing costs have increased to their highest level since it joined the eurozone.
The debt crisis sweeping the eurozone has put pressure on Mr. Berlusconi’s government to move quickly to enact unpopular austerity reforms to protect the Italian economy.
But Emiliano Alessandri of the German Marshall Fund in the United States says even if Mr. Berlusconi left office, Italy’s problems would remain.
He says the idea Italy’s structural problems will be solved by Mr. Berlusconi’s political demise alone is “wishful thinking.”