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Italy Sinks Further Into Chaos

As the Berlusconi conviction spreads, confusion and disarray follow, the FT reports:

The jail sentence handed down to Silvio Berlusconi with his conviction for tax fraud by a Milan court is set to intensify a power struggle within his centre-right party while adding to the mounting problems of Italy’s government under Mario Monti.

Twenty years ago, Italy’s postwar political order collapsed in a stinking heap of lies and corruption as a series of revelations about embedded thievery at the heart of the Italian political system broke the Christian Democratic Party that had stood at the center of Italian politics since the 1940s.

Now something similar seems to be happening as the combination of Berlusconi’s personal and juridical meltdown intersects with the relentless pressure the Euro crisis is bringing to bear on Italy’s government and economy.

Unfortunately, Italy is much better at dismantling old orders than at putting new ones together. The great worry is that the dysfunctional, distracted Italian political system will be so paralyzed that it won’t be able to function even as the economic situation becomes more dire.

ECB policy has won some time for Europe and its member states to rebalance themselves and implement long term solutions to the complicated but grave problems they face; the situation in Italy strongly suggests that the time won will be lost without solutions being put in place.

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