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Dolce Vita hangover: Italy the new focus in crisis

November 7, 2011 • Business


In this photo taken Wednesday, Oct. 12, 2011, people walk through an open air market in downtown Milan, Italy. Postwar prosperity allowed hundreds of thousands of workers to retire with full benefits before the age of 50. Public spending ran over, creating bloated bureaucracies and a political class that consume half of the national wealth generated each year. Easygoing Italians, expecting little from the state, rarely think twice about paying under the table for home improvements, dental work or even a frothy cappuccino. But the bill for decades of excess is coming due, and the price to escape Europe’s sovereign debt crisis is steeper than many feared. (AP Photo/Luca Bruno)

MILAN (AP) — The Dolce Vita lasted for a long time in Italy, but now it’s back to reality.

Postwar prosperity allowed hundreds of thousands of workers to retire with full benefits before the age of 50. Public spending ran over, creating bloated bureaucracies and a political class that consume half of the national wealth generated each year. Easygoing Italians, expecting little from the state, rarely think twice about paying under the table for home improvements, dental work or even a frothy cappuccino.

But the bill for decades of excess is coming due, and the price to escape Europe’s sovereign debt crisis is steeper than many feared.

Premier Silvio Berlusconi, the tenacious leader who has survived sex scandals and multiple criminal prosecutions to head three governments since 1994, is losing his grip on power and lacks the political muscle to push through change.

During an economic summit in France, he asked the International Monetary Fund to monitor the country’s reform efforts, a humiliating development for the world’s seventh largest economy.

The deepening crisis has already shaken three governments — in Ireland, Portugal and Spain, where early elections are scheduled in two weeks — and Greece’s Socialist-led government is struggling to form a unity government after narrowly surviving a confidence vote. Many thank Italy will be next.

“Berlusconi’s time is up,” Ferruccio de Bortoli, editor of the leading Italian daily Corriere della Sera, wrote this week. “He risks Login to read more

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