Newspaper article The Journal (Newcastle, England)

Politicians Starting to Get Their Acts Together; SHARE WATCH SCOTT FARNETTI

Newspaper article The Journal (Newcastle, England)

Politicians Starting to Get Their Acts Together; SHARE WATCH SCOTT FARNETTI

Article excerpt

Byline: SCOTT FARNETTI

BEING of Italian heritage can sometimes be difficult. I am not just referring during the Six Nations rugby tournament, or the numerous football scandals, but specifically with regards to politics.

The position of prime minister in Italy has changed 12 times since 1990 and the country has often been dubbed the sick man of Europe, enduring sluggish economic growth for more than a decade. But Italy's political and financial turmoil should not just be a domestic concern as it also threatens Europe's future.

Last year, investors endured jittery markets and the FTSE 100 Index plummeted by nearly 20% between July and October. In large part, this was down to concerns over the troubles in Europe.

To put it simply, European governments are overly-indebted and the cost of borrowing, or bond yields in technical terms, has been rising sharply. This is increasing the chance that some of these countries do not repay their debts - it's already too late for Greece.

Many European banks have large holdings in the debt of European nations and defaults would equate to huge losses. But while Greece is small in the grand scheme of things, it would be a disaster if Italy or Spain were to go down the same route. Italy has the third largest bond market in the world, only behind the US and Japan, with over $2 trillion in debt. Rising Italian government bond yields not only threatens Italy's financial stability, but also Europe's.

As much as it pains me to bash a fellow Milanese (and owner of my football team, AC Milan), Italy's ex-prime minister Silvio Berlusconi was not the man to restore faith in Italy. It's astonishing he lasted so long but his tenure was more to do with the lack of capable opposition than his own political prowess.

Skip to November 2011 and step in Mario Monti, or "Super Mario" as nicknamed by his colleagues and the Press. …

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