Austerity Comes To Italy-- Blaming Democracy For The Excesses Of The Predatory Banksters?

Corrupt behind what Americans conceive of in our politicians-- and disgraced for having been caught on tape referring to the country whose government he heads as "shitty"-- career criminal/right-wing Prime Minister Silvio Berlusconi knows he's committing political suicide by shoving a brutal austerity package down his people's throats. His right wing coalition has a firm grip on the Senate and they just passed the toxic package 165-141. It will be tougher in the lower house.

The measures will to generate more than 50 billion euros ($66.2bn) in cost savings through a mix of new taxes, pension changes and cuts to public spending. The plan aims to balance the budget in 2013 and help the government bring down Italy's enormous debt, which amounts to 120 per cent of its gross domestic product, the second-highest ratio in the euro zone after heavily indebted Greece.

Despite the Senate's backing, political opposition to the package remains high. To ensure the measures passed the Senate, Mr Berlusconi imposed a confidence vote-- a parliamentary manoeuvre that tied the survival of his government to the measures' passage.

Over the past two months, Mr Berlusconi has faced a tough balancing act, weighing the political interests of his coalition partners against the demands for growth-boosting measures from the European Central Bank, which has begun buying Italian bonds to lower the country's borrowing costs.

The ECB has warned that its patronage is only temporary and has called on Italy to introduce tough reforms that will address the country's high youth employment and lack of productivity.
"We have to face two major problems: our debt and our lack of growth," said Enrico Letta, a leader of the opposition Democratic Party.

The current package doesn't address those obstacles in any concrete way.

The measures include an increase in the value-added tax to 21 per cent from 20 per cent, the introduction of a 3 per cent "solidarity tax" on people who earn more than 300,000 euros ($396,940) a year, and an increase in the retirement age for women working in the private sector to 65 from 60 as of 2014.

Thousands of workers went on strike earlier this week, responding to a call by a major union that has pledged to oppose the plan regardless of whether it passes Parliament.

Some politicians and economists have said a technocratic government would be better suited to adopt the unpopular measures required to shock Italy's moribund economy back to life.

As Time points out there's a sense of unfairness that has "infuriated a public already fed up with the disproportionate compensation enjoyed by its ruling elite." And with disdain for Berlusconi growing-- as well as for the pampered political class ("The Caste"), what's this "technocratic government" thing being pushed. A government of banksters? Modern day fascists and plutocrats? Democracy is getting slapped around in Europe (as bad as it is in Michigan) by those who know what's better-- even if "those who know better" are the ones who have led the way into insolvency.

Opinion polls put Berlusconi's approval ratings in the low 20 percent range, European partners have heaped scorn on his center-right government's handling of the crisis and the ECB has said it will not keep supporting Italy indefinitely.

The premier should be down and out but the center-left opposition has struggled to establish itself as a cohesive political force and make capital from either the government's floundering record or Berlusconi's multiple personal scandals.

As Wednesday night's comfortable victory in a Senate confidence vote on the austerity measures underlined, the government has the numbers to survive, at least for the moment.

"It's a very serious situation," said Renato Mannheimer, one of Italy's leading pollsters, whose regular survey in the Corriere della Sera newspaper this week showed 8 out of 10 Italians opposed to the government and a similar number critical of the center-left opposition.

"There's one scandalous episode after another, there's the economic crisis, we're being observed very critically by the world at large and there's generalized distrust of the political class," he said.

"But as long as Berlusconi can hold his majority together in parliament, the situation remains, unless there is some outside shock from the bond markets or something similar," he said.

That does not mean the increasingly tense coalition between the People of Freedom (PDL), a party built entirely around Berlusconi, and the pro-devolution Northern League will get much done. Few believe it will survive until elections scheduled in 2013.

Berlusconi is no longer the undisputed master of Italian politics and business and newspapers speculate daily about the prospect of his replacement by a technical government of experts or a temporary cross-party administration that could push through tough reform.

His coalition's chaotic handling of the austerity plan has caused deep alarm among the tightly interwoven business and political establishment whose support has traditionally been needed for Italian governments of all colors to survive.

"We talked a lot about a government of technocrats or a 'wide-majority government'," said one senior banker who attended last weekend's Ambrosetti forum, the annual gathering of Italy's business elite at Cernobbio on the shores of Lake Como.

"We need a government that is able to react quickly but...a government which has the support of parliament can't be replaced," he said.

The wrangling over austerity measures to bring Italy's creaking public finances under control has nonetheless shown how deeply divided the coalition has become and how far Berlusconi's own power to enforce agreement in cabinet has weakened.

Business leaders at Cernobbio watched in shock as an urgent call for action by ECB President Jean-Claude Trichet was answered by Tremonti with nothing other than vague assurances and sweeping reflections on history and philosophy.

"It seemed like he couldn't promise anything on behalf of the whole government. He seemed not to have the power to do so," said the banker, who was present at the closed-door session.

Although parallels are not exact, there is increasing talk of the dark days of "Tangentopoli," the "Bribesville" scandals of the early 1990s when Italy's political order was driven out in a wave of popular fury at its corruption and inefficiency.

"We have that climate a little bit and I think at a certain point, if they ask for more sacrifices, things could blow up," said Turin University political scientist Luca Ricolfi.