Why Italy’s Government Is Suddenly All About Austerity

Time has just published my story on Italy’s austerity package.

It wasn’t a burst of negative financial news that threatened to tip Italy toward economic catastrophe this week. Instead, it was something that in less fraught times would have been seen as politics as usual: the escalation of a feud between Prime Minister Silvio Berlusconi and a member of his government.

The trouble was that the man Berlusconi was criticizing is Italy’s Finance Minister, Giulio Tremonti, a former law professor many believe has been instrumental in keeping Italy from following in the footsteps of crisis-ridden Greece, Portugal and Ireland. So when Berlusconi told the Italian daily La Repubblica in an interview published July 8 that Tremonti is “the only Minister who is not a team player” and that “he thinks he’s a genius and everyone else is stupid,” the markets reacted.

Read the rest.