Using A RantAWeek to clarify the complexities of news.
Well for now, the world will miss hearing about Berlusconi’s crazy bunga bunga parties. However, with his resignation, these next few months of transition are make or break for Italy and the rest of the world. With Italy being the third largest economy in the eurozone, which when considered as a single economy is the largest in the world, whatever happens in Italy will send shock waves through the rest of the world. Italy is currently on the brink of utter financial collapse, similar to Greece. However, much unlike Greece, their collapse could be the end of the eurozone. Whereas Greece is a relatively small economy that can be bailed out, if Italy were to collapse, the ECB would be powerless and it would likely drag the rest of the eurozone down with it. Also, while Italy is a large economy, it is only the 10th largest in the world, and should therefore not have much of an impact. However, because of it’s importance in the eurozone, Italy’s ruin would be the first domino to fall resulting in global economic recession. With it’s great economic importance and it’s position on the brink of collapse, these next few weeks in Italy could very well determine whether or not the world heads back towards global recession.
Currently in Italy, Mario Monti is putting together a new government to replace Berlusconi’s government. With this, a new era of Italian prosperity is supposed to be ushered in. And it must be ushered in, because without it, the world will keep on edging toward global recession. Mario Monti is the former EU commissioner, and therefore seems like a good choice to head this new government because now the state of Italy is no longer an issue of only Italy, but rather is one of the eurozone as a whole. Also, at this point almost anyone seems like a better choice than Berlusconi, and this was reflected in the falling bond rates following his resignation announcement. Italian bond rates have been on the rise for a long time now, however following Berlusconi’s resignation they dropped immediately. This shows that the Italian population is relieved at Berlusconi’s resignation and it signifies moving towards recovery. More importantly, Monti has a background in economics. While this point may seem irrelevant, we are seeing a move towards more economists in power in Europe, and Monti fits right in. This move is also seen in Greece, where Papademos’ primary background is in economics. Europeans are realising that finances are the most pressing political issues and are therefore opting for officials with strong backgrounds in economics. So with his background in economics and the EU, Mario Monti seems to be a good move on Italy’s part.
So with Italy being such a vital part of the world economy, we can only hope that in these next few key weeks, Mario Monti can take Italy away from the verge of collapse and point the world economy slightly away from global recession. We can also hope that Monti does not go the way of Berlusconi and have bunga bunga like parties. What would he call them anyway? Munga munga?