Attention turns to the German courts tomorrow for a ruling on the legality of bailouts. Today, eyes are on Italy.
Italian PM Calls Vote of Confidence
Italian Prime Minister Silvio Berlusconi called a Cabinet meeting today to authorize a confidence vote in Parliament on an amended 45.5 billion-euro ($64.5 billion) austerity plan that prompted a general strike.
The meeting at 6 p.m. in Rome will pave the way for a vote on the measures, which will include raising the value-added tax rate by one percentage point to 21 percent, a 3 percent levy on incomes of more than 500,000 euros a year as well as an increase in the retirement age of women in the private sector starting in 2014, Berlusconi’s office said in an e-mailed statement.
The eight-hour walkout by CGIL, Italy’s biggest union, disrupted travel and manufacturing as protests in Rome and other cities attracted as many as a million people, according to the union. Fifteen percent of workers at Fiat SpA (F) took part in the strike, the nation’s biggest manufacturer said by e-mail.
Fifty-eight percent of employees stayed off the job, the union said in a statement on its website, citing a survey. Innovation Minister Renato Brunetta, citing a poll of 10 percent of civil servants, said 3.1 percent of public-sector workers participated in the strike, according to an e-mailed statement.
About 50 percent of trains, most of them regional, were halted, according to CGIL. Rome’s two metro lines and local commuter trains were shut down, ATAC, the company that runs them, said in a statement on its website.
Hundreds of people were stranded at airports in the capital and Milan as flights were delayed or canceled. Alitalia SpA said it canceled some domestic and international flights and Ryanair Holdings Plc (RYA) said it canceled 200 flights to and from Italy, affecting some 35,000 passengers.
Italian Workers Strike Against Austerity Measures
The New York Times reports Italian Workers Strike Against Austerity Measures
Thousands of workers took to the streets in Italy on Tuesday in a general strike to protest a package of ever-changing austerity measures required by the European Central Bank and now up for debate in the Italian Senate.
The eight-hour strike shut down transport and businesses nationwide. It was called by the C.G.I.L. union, which represents 2 million public and private sector workers, in opposition to a 45.5 billion-euro austerity package of tax hikes and spending cuts proposed by the Italian government last month to reduce Italy’s budget deficit by 2013.
The Northern League, the most powerful party in Mr. Berlusconi’s coalition, had been vehemently opposed to raising the retirement age for women, since in Italy public day care is scarce and grandmothers routinely serve as child care providers.
Addressing a crowd of an estimated 70,000 people in Rome on Tuesday, Susanna Camusso, the leader of C.G.I.L., called the change to the labor law “unjust” and threatened more strike actions if it weren’t removed.
“If Parliament doesn’t strike this from the bill, they have to know that we will use every path and initiative possible so that this shameful measure is removed,” she told an estimated 70,000 supporters outside the Colosseum on Tuesday.
Pierluigi Bersani, the leader of the center-left opposition, criticized the measures. “This package should be strengthened and made more equitable,” he said. “It’s useless to pass it quickly if it’s not done well. Otherwise we will end up having a new austerity package every week.”
On Monday, Mario Draghi, the outgoing Bank of Italy president and incoming president of the European Central Bank, became the latest European leader to pressure Mr. Berlusconi to approve the measures swiftly.
He said that Italy should “not take it for granted” that the European Central Bank would continue buying Italian debt.
Expect Hit to Tourism
One of Italy’s bright spots is tourism. Don’t expect that to last if transportation disruptions become the norm.
European Stocks Lowest in Two Years
Please consider European Stocks Drop to Two-Year Low; Shell, Lloyds Lead Decline
European stocks declined for a second day, dragging the Stoxx Europe 600 Index to the lowest in two years, amid concern that the global economy is slowing.
The Stoxx 600 lost 1.6 percent to 223.13 at the 4:30 p.m. close in London, the lowest since July 29, 2009. The gauge has tumbled 23 percent from this year’s peak in February amid concern that Europe will fail to contain its sovereign-debt crisis and that the economic recovery in the U.S. will falter.
The Stoxx 600 pared an earlier loss of as much as 3.6 percent as the European Commission said it may present draft legislation on joint bond sales by euro-area nations when completing a report on the feasibility of common debt sales, putting pressure on Germany to drop its opposition.
Euro Bonds Aren’t Happening Anytime Soon, If Ever
This is the third reported euro-bond rally attempt in a few week. Here’s the real deal: they aren’t happening.
Italy Bond Yields Relatively Quiet
Yield on Italian 10-Year government bonds was relatively quiet on a day of massive turmoil elsewhere related to Swiss Franc intervention (see Switzerland to “Buy Foreign Currency in Unlimited Quantities”, Sets Euro Peg 1.20; Extreme Mid-Day Currency Volatility; Gold is Safe Haven, Not Francs)
No Confidence Stunt
Berlusconi’s approval rating is 22%. Nonetheless, he will survive a vote of no confidence because for now, he has over 50% of the votes in Parliament. That Berlusconi needs to pull this stunt is certainly not confidence inspiring.
Mike “Mish” Shedlock
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