November 11, 2011Italian Senate Passes Austerity Plan
The upper house of the Italian parliament passed austerity measures meant to rein in the country's high public debt today amid fears of mounting eurozone sovereign debt contagion (BBC). The lower house of parliament will vote on Saturday, paving the way for Prime Minister Silvio Berlusconi's resignation (Guardian) and the formation of a new technocratic government.
President Giorgio Napolitano made Mario Monti, a former European commissioner, a life senator, setting him up to lead a new Italian government (Bloomberg). If he becomes prime minister, Monti will be tasked with carrying out labor and tax reforms, while tackling bureaucratic regulations and entrenched special interests that undermine business competition (WSJ).
Meanwhile, Greece--the original epicenter of the debt crisis--named an economist and former vice president of the European Central Bank, Lucas Papademos, as the leader of a new coalition government. Papademos is expected to garner support for a new EU bailout package (NYT) that requires Greece to implement fresh spending cuts and tax increases.
In the following video, former Federal Reserve chairman Alan Greenspan discusses the increase in U.S. debt levels, the roles of the Central Bank and the European bailout fund, and Germany's position in the European financial crisis.
At a CFR symposium, experts reflect on the effects of Greece and Italy's economic turmoil on the eurozone and discuss the political dimension in resolving the crisis.
New Prime Minister Lucas Papademos faces daunting challenges to rescue Greece's economy. A fiscal collapse, analysts say, will also raise questions over the eurozone's ability to manage debt crises in other struggling European economies, explains this CFR Analysis Brief.
Despite a pledge by Berlusconi to resign, Italy faces pressure to address its sovereign debt burden by quickly implementing austerity measures or risk a new magnitude of eurozone contagion, explains this CFR Analysis Brief.
