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Berlusconi insisted that a government can be formed and called on Italians to ignore the "crazy" markets. "Markets go their own way. They are independent and also a little crazy," Berlusconi said, adding that a government can be cobbled together, if rival politicians are willing to "make some sacrifices." Grillo said his forces would seek to thwart any Bersani-Berlusconi deal. Raising the specter of early elections, he predicted any such coalition will "last seven, eight months. The economy won't let them escape." Bersani himself later made subtle overture toward Grillo's forces, conceding that the center-left campaign had not gone deep enough for change. "We finished first, without winning," he conceded. Italy is hugely important for the future of the euro, and its apparent stability over the past six months has been one of the reasons that concerns over the currency have eased. Of the 17 European Union countries that use the euro, Italy has the second-highest debt burden as a proportion of its gross domestic product, at 127 percent. Only Greece's is higher. Italy has to spend around euro80 billion a year just to service its debt. The worry across financial markets is that Italy's appetite for reform may wane and its debt situation may deteriorate. That was evident in a pair of bond auctions Wednesday. Though it raised
euro6.5 billion it had to pay higher interest rates to get investors to part with their cash. The country sold 10-year bonds at a yield of 4.83 percent, way up from 4.17 percent last month. The yield on five-year bonds rose to 3.59 percent from 2.94 percent.
Though Italy's annual borrowing -- its budget deficit -- is relatively small compared with other euro countries at 3 percent of its annual gross domestic product, its overall debt stands at a colossal
euro2 trillion.
[Associated
Press;
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