Italian Government on Brink of Collapse (Bloomberg)
If you think the U.S. government shutdown is an extreme move, Italy’s political crisis makes that look like a walk in the piazza. Italian Prime Minister Enrico Letta spent the weekend trying to hold his coalition government together in the face of pressure from ex-Prime Minister Silvio Berusconi’s backers. Berlusconi faces expulsion from Italy’s parliament for tax fraud, yet still wields considerable control. He’s worked feverishly to tear down the Letta coalition in the hope of avoiding expulsion. All of this instability has left investors leery of funding the country — leaving it with the world’s third-largest debt burden, behind only Japan and the United States. And until the political situation is resolved, don’t expect to see the world racing toward Italy for investment.
Prime Minister Shinzo Abe of Japan reaffirmed his government’s position that the country’s sales tax will increase from 5 to 8 percent, beginning next April. Honorable Abe remains steadfast in his belief that this 60 percent increase is critical in helping Japan rein in soaring debt levels.
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