It’s unlikely the world has ever heaped so much attention on Italy as it did yesterday, November 8. And not the gentle kind of attention reserved for an interesting nation not well known for its respect for the rule of law but nonetheless admired for its inventiveness, its flexibility, not to mention its rich landscape and museums.

No, this was cold-hearted, hostile attention by those who consider Italy a risk to everything around it, who know that what’s happening in Italy today may well have immediate repercussions on the future of global governance, as well as its own.

The attention came from those who have seen the Greek abyss and know that Italy meeting a similar fate would be something infinitely worse, an event that could risk undoing already precarious global balances.

If Italy comes undone, France could be next – a France that yesterday, not surprisingly, modified its own austerity plans, increasing VAT. After France, even the United States could follow.

The Italian prime minister is at his Arcore villa

Traders believe Italy can be the difference-maker between global economic collapse and recovery. Under such circumstances, Prime Minister Silvio Berlusconi is no longer seen in foreign circles as an oddball character known for his occasionally embarrassing remarks.

He’s no longer just a neighbour that heads of states and governments have been reluctant to be photographed with in recent years. He’s instead become a source, if not “the” source, of all risk, a loose cannon on the tempestuous battlefield represented by the ever-widening global crisis.

Behold Reuters and The New York Times, both of which have wondered aloud if this is the Italian “endgame”; look at the Wall Street Journal and the [Financial Times](http://www.ft.com/intl/cms/s/62b7533c-095b-11e1-a2bb-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F62b7533c-095b-11e1-a2bb-00144feabdc0.html&_i_referer=http%3A%2F%2Fsearch.ft.com%2Fsearch%3FqueryText%3DBerlusconi%26ftsearchType%3Dtype_news#axzz1d6S1IxVd [08/11/11 15:33:50] Gerry Feehily: there's no point linking it), both of which are discovering the stereotypical dimensions of the Italian image and how little the world actually knows about this suddenly-weak link in the global chain.

While the rest of the world poses deeply serious questions, the Italian prime minister, instead of dealing state issues, is at his Arcore villa with his children and Fedele Confalonieri, the president of Mediaset who also sits on the board of the Berlusconi family’s principle holdings.

Opposition unable to articulate lucid positions

This meeting takes place while stock markets prematurely celebrate a resignation, some say in a matter of hours. After the family meeting comes one with the Northern League (Lega Nord), perhaps regarding “reforms” (Berlusconi ally Umberto Bossi is the country’s reforms minister), reforms that the rest of the world envisage differently from we Italians, most of whom, including the opposition, hope can be enacted only verbally. Only later does Berlusconi actually leave for Rome, to return to being prime minister (which he still is).

The management of Silvio Berlusconi’s personal interests contrast directly with the management of Europe’s problems and those of the global economy. Maybe it’s always been this way and the world simply never noticed, along with many Italians. Italy lies between these two management plans, the personal one and the global one.

It’s an Italy forced to yield to policies and financial monitoring dictated by global markets because it can’t pay its debts. The rest of the world is supremely interested in programs, independently of governments. The Italian political world is supremely interest in government, independently of programs.

As a result, Italy is something of a void; a political void, for now represented by the resignation-non resignation of its prime minister and an opposition unable to articulate lucid positions. Sadly, and this is the most worrying part, Italy also seems void-like when it comes to human capital.

Italy’s loss of prestige and credibility

According to recent Bank of Italy data, nearly one in four youths – more than two million in all – between the ages of 15 and 29 aren’t working or attending school. Yet the country desperately needs both that work and that studying.

This is the void into which Italy risks sinking. And it’s a costly one. Though difficult, it’s possible to calculate how much each additional day Berlusconi’s rule, under these circumstances, costs the Italian treasury. The costs are based in terms of interest rates on the outstanding Italian debt that’s being refinanced at ever-higher rates, so much so that the amortized benefits brought about by Italy’s decision to increase VAT is eaten alive by higher taxes.

To underwrite Italian shares over German ones, today’s measure is 500 basis points, five percentage points higher than the going market rate, a kind of “reverse prize” to compensate for the risk involved. There are also a number of less obvious costs, including Italy’s loss of prestige and credibility in the financial world. That’s a cost businessmen know all too well and whose full dimensions the country is only beginning to understand.

This is the void Italy has to reckon with. All past successes, whether in international markets or in terms of political weight within the European Union, as well as the right “acquired” by workers and pensioners – all of it seems to have been sucked into a gorge from which Italy will emerge only through a change in the executive.

But the gravest error would be the delusions that such a change is by itself sufficient or represents a miraculous fix-all. If all goes well, we’ll have some bright spots along a long hard road.

Translated from the Italian by Christopher P. Winner