In less than three months, Italy has changed from a country whose fiscal and economic ailments are difficult but not impossible to cure into a country whose atrophied and self-serving political system threatens to destroy the eurozone.
For this alarming state of affairs there are various culprits: lawyers, notaries and other interest groups who refuse to open up their professions to competition; trade union leaders who would rather call a strike than co-operate in reforming labour markets; wealthy Italians who specialise in tax evasion; and everyone who connives at organised crime. However the principal responsibility lies with Silvio Berlusconi, the Nero-like prime minister who fiddles while Rome burns, and with his dysfunctional centre-right coalition.
If, in July, the government had committed itself to a bold combination of public expenditure controls and growth-enhancing structural reforms, it is conceivable that Italy would have avoided being sucked into the centre of the eurozone’s debt crisis. Instead the transparent disagreements in Mr Berlusconi’s coalition over what to do contributed to a surge in Italian government bond yields. The European Central Bank felt obliged to step into the secondary market and buy Italian debt to prevent a catastrophe. Now, short of letting Italy’s bond yields return to the critical levels of early August, the ECB is in the uncomfortable position of lacking virtually all means to put pressure on Mr Berlusconi to fulfil his promises of economic reform.