Our Financial Future in that Guy’s Hands?

Mercy me, James B. Stewart observes that our financial future is tethered to the wisdom of Berlusconi. We are not in good hands folks.

It finally dawned on me this week that the value of my retirement account might depend on Silvio Berlusconi…. [Europe’s #1 ranking Mr Scandalo, whose scandals…]

… might have remained diverting tabloid fodder for most people outside of Italy, but this week the country moved to center stage in theEuropean debt crisis, pushing Greece, Ireland, Portugal and Spain at least temporarily into the wings and allowing Mr. Berlusconi to assume what seems to be his natural place, which is in the spotlight. On his 75-year-old shoulders rests the task of shoring up Italy’s finances so that the European Central Bank buys more Italian sovereign debt, to gain French and German support for a larger bailout fund to protect Italy’s banks, and to keep Italy from becoming another Greece and plunging the world into an even more devastating financial crisis….

Greece’s debt is modest by comparison, and the fierce effort waged by European banks to avoid a huge write-down on the value of their Greek loans was less about Greece then about setting a precedent that could extend to Italy and other heavily indebted countries. Outside of Italy, French banks have the biggest exposure to Italian sovereign debt — over $500 billion, according to Goldman Sachs. And who knows what institutions (including American ones) insured all that debt?…

Perhaps that shouldn’t have been much of a surprise. However reasonable in the abstract, the reforms go to the heart of the Italian way of life, which should be obvious to anyone who has whiled away a few hours in one of Italy’s picturesque Renaissance squares watching Italians leisurely sipping cappuccinos. Although Italy has one of the lowest unemployment rates in Europe (7.9 percent as of August), that’s because so many people aren’t looking for jobs. Only 57 percent of people ages 15 to 64 were employed in 2010, one of the lowest rates in the world…. over half a million Italians retired before age 50, according to a small business group report released this week.