News Update :

Now, Cheers as Berlusconi quits amid eurozone crisis

Sunday, November 13, 2011

Italy: Italian Prime Minister Silvio Berlusconi quit power Saturday to cheering from a crowd of thousands in Rome after a wave of market panic that shook the eurozone and brought his long rule to an end.

Berlusconi submitted his resignation to President Giorgio Napolitano> triggering an explosion of joy in the Italian capital with people uncorking bottles of champagne> dancing in the streets and honking car horns.

“I am deeply embittered>” the 75-year-old Berlusconi> who has been in power for 10 of the past 17 years> told reporters after he was greeted following his last cabinet meeting with shouts of “Buffoon!” and “Go Home!” “Ciao! And above all don’t come back!” shouted one man> while another declared: “We are very> very happy!” “We’re all delighted. We’ve had enough of this person who always acted in his own interests. Italy is headed for a better future>” said 50-year-old Tommaso Romito> muffled up in a white scarf on a cold night in Rome.

Napolitano is to hold talks with all political forces from 0800 GMT to about 1700 GMT on Sunday> after which he is expected to nominate former EU commissioner Mario Monti as the head of a new transition government.

International Monetary Fund chief Christine Lagarde> US President Barack Obama and French President Nicolas Sarkozy have all called on Italy to move quickly to form an interim government instead of calling early elections.

Eurozone debt crisis: Italian prime minister Silvio Berlusconi will address the country's parliament on Wednesday about the soaring interest rate on its borrowing costs. Photograph: AGF/Rex Features
The eurozone debt crisis threatened to erupt again on Tuesday as Italy and Spain's borrowing costs hit record highs> helping to drive Britain's own borrowing costs down to a record low.

The euro also lost ground against most major currencies and the Italian stock market hit a 27-month low> as investors appeared to lose faith in the latest European rescue package.

The yield> or interest rate> on Italian 10-year bonds rose to nearly 6.3% at one stage> with the equivalent Spanish bonds yielding almost 6.5% early on Tuesday. If yields reach 7%> a country has effectively lost the support of the international markets.

Spain's prime minister José Luis Rodríguez Zapatero postponed the start of his holiday> allowing him "to more closely follow" the situation.

In contrast> UK 10-year gilt yields hit an all-time low of 2.76%> amid suggestions that the UK has become a relative safe haven in response to the debt crises raging in both Europe and America. The glut of disappointing manufacturing data released on Tuesday also reinforced fears that the global economy is faltering.

Jane Foley> senior currency strategist at Rabobank> said that Britain's economic fundamentals are "far from attractive"> but less grim than other countries.

"Slow economic growth> low interest rates> a highly indebted consumer sector and a large government fiscal deficit suggest there are clear similarities with the US>" said Foley.

"The UK government> however> has proved itself to be better positioned to tackle its deficit demons and although there has been a lack of progress to date on achieving deficit reduction in the UK> at least there is no crisis at present."

Gold> that other refuge for risk-averse traders> hit another record high – reaching $1.639.66 an ounce.

Berlusconi’s announcement Tuesday that he would resign once parliament approved a package of economic reforms that he had promised the European Union> prompted fears of a prolonged political crisis in the eurozone’s third largest economy further dragging down the entire euro area. Investors are pushing for a new government to be in place by Monday> in time for the opening of the markets.

Speaking on the eve of an Asia-Pacific summit in Hawaii> Obama said: “There is still work to be done in the broader European community to provide markets a strong assurance that countries like Italy will be able to finance their debt.”

In a tumultuous parliamentary session that voted through economic reforms including state asset sell-offs and a liberalisation of the labour market> opposition lawmakers spoke of their relief at Berlusconi’s exit. AFP
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