Berlusconi to Resign

On Tuesday, Italian Prime Minister Silvio Berlusconi announced that he will resign after parliament approves economic reforms. The announcement comes after Parliament passed a budget measure with 308 votes, but saw over half of the 630 lawmakers not taking part in the vote, a vivid indication that Berlusconi no longer has the support of a majority in Parliament.

Italy has the third largest economy in the eurozone and eighth largest in the world. Struggling European countries like Greece, Ireland, and Portugal already had to be bailed out. Although currently solvent, Italy poses a tremendous challenge with its 1.9 trillion euro debt, or about 120% of its economic output, that Europe can't afford to bail out. The Italian bond yield reached 6.77% on Tuesday, dangerously approaching the 7% mark that prompted bailouts for Portugal and Ireland.

In the United States, the news of the impending resignation pushed Dow up 101 points to close at 12,170.18. Stock markets in Italy, Germany, and France also rose slightly.

Sources:

• http://finance.yahoo.com/news/Berlusconi-promises-to-resign-apf-3530821317.html?x=0&sec=topStories&pos=2&asset=&ccode=
• http://edition.cnn.com//2011/11/08/world/europe/italy-economy/index.html
• http://finance.yahoo.com/news/Stocks-rise-after-Berlusconi-apf-803223079.html?x=0&sec=topStories&pos=4&asset=&ccode=