An Italian judge has ordered Premier Silvio Berlusconi to stand trial on charges he paid for sex with a 17-year-old girl and then tried to cover it up. Judge Cristina Di Censo handed down the indictment Tuesday. The trial is set to begin April 6.
Once again, The Hourly G isn’t interested in tawdry sex stories—but if Berlusconi falls, it could have unanticipated consequences for the euro.
Why? Because Italy is in the same hole as Spain, Ireland, Portugal and Greece—there is a reason they are collectively known as the PIIGS.
All of the weak economies in the euro-zone—the PIIGS—are over-indebted: They need further funding from the bond markets, in order to stay operational. If there is a seizure in the euro-bond market—for whatever reason—then all of these countries, no just Italy, could suffer a crash.
And even if it’s just Italy, that’s still a huge elephant: Italy’s GDP is $2 trillion, compared to $3.3 trillion for Germany. Italy simply cannot be bailed out like Ireland ($204 billion) or Greece ($305 billion).
Ordinarily, sexual politics wouldn’t influence macro-economic policy—but this is Italy. If the Berlusconi government falls, there will be political chaos in Italy—and therefore no clear direction for the bond markets, which at this point in time rule the European continent.
So this isn’t a Bill Clinton-style freak-show, put on for our collective amusement, but ultimately inconsequential—this Berlusconi thing matters.