As bad as the political situation in the United States can get, American politicians can't hold a candle to what's happening in Italy. We've reported on this blog that there has been significant upheaval and turmoil in the European nation since Prime Minister Mario Monti left office in 2012. A fractured government – created in part by the decades-long political dominance of former premier Silvio Berlusconi – has only until recently been able to survive the tribulations of rule.
However, the situation worsened this week as Berlusconi declared a need for elections. At the same time, several of his former lieutenants within his center-right political party have broken off with the intention of forming their own organization. As one can imagine, these developments not only bode poorly for the health of the Italian economy, but that of the wider European system – including the Eurozone – as well. Remember that, during 2009-2010, Italy was forced to stave off fears that its debt was becoming too high. A full-on market panic began to set in, and it was this confluence of events that ended up costing Berlusconi his job in the first place. Now back in power to a certain extent – while battling off judicially upheld convictions – Berlusconi is trying to use every tool he has to hang onto his position, even if that means scuttling the fragile coalition government formed with the Northern League and another center-left party from the more affluent regions of Italy.
Where will this all head? At this time, it's tough to say. Contagion could rear its ugly head and bring down the government, or at least make its finances virtually unbearable. At the end of the day, it's vital that American investors take steps to secure their own finances, including putting money in income-generating cash flow real estate.