Italy’s Mario Monti: Dented Armor, but Still the Only Knight to the Rescue

My piece on Mario Monti’s struggles has just been published by Time.

If there was one thing Mario Monti should have been able to count on, it was the markets. Seven months into his term as Italy’s Prime Minister, a period in which he has muscled through tough pension reforms and painful tax hikes, it’s not surprising that his public support has dropped to half of the more than 70% approval rating he enjoyed shortly after taking office. Nor is it a shock that, with elections to replace him expected in less than a year, the country’s politicians have begun to balk at some of his proposed measures.

The bigger blow is Italy’s rising cost of borrowing — an indicator that investors are starting to lose confidence that the country will be able to pay them back. In the early days of the Monti government, bond yields plunged. From 7%, a number many economists see as unsustainable, they briefly touched down at just under 5% in March before resuming a steady rise. Last week they broke 6%, leading many to wonder once again if Italy might be the next domino in the euro-zone crisis.

Read the rest.