Berlusconi’s exit may mark the beginning of the breakup of the European Monetary Union (EMU), changing the business environment in Europe and markets globally. The problem in Italy lies in the country’s politics, not its economics; if the political class demonstrates they will do what is necessary, catastrophe can be averted. And over the past half century, Italy has often done the right thing (usually after exhausting all other options). The country’s politicians turned a ruined country into the world’s 8th largest economy, outwitted the most powerful and genuinely popular communist party in the western world, and entered the Euro, to name just a few accomplishments. Unfortunately, the challenge before them today is far greater and far less conducive to political machinations. The country has to decide whether it will be a competitive and dynamic economy or a larger version of Greece; the health of the world economy, and the future of the Euro, hang on the balance.
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