Draghi Resigns As Premier, Plunging Italy Into New Political Crisis; Euro, Bonds, Stocks Slide

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Mario Draghi resigned as Italy’s prime minister, an inevitable outcome after the former Goldman banker and ECB head failed to round up enough support for vote of confidence on Wednesday, ending a national unity government formed to tackle unpopular reforms, plunging Italy into turmoil and putting it on course for snap elections as soon as early Sept 18 (according to Rai TV), in the process sparking a new political crisis for Europe at a time of already acute economic challenges.

In a statement, President Sergio Mattarella’s office on Thursday said that Draghi would remain in charge of current affairs.

 “After this I saw in the night visions, and behold, a fourth beast, dreadful and terrible, exceedingly strong. It had huge iron teeth; it was devouring, breaking in pieces, and trampling the residue with its feet. It was different from all the beasts that were before it, and it had ten horns” Daniel 7:7 

Mattarella, who accepted the resignation just hours before the ECB will announce Europe’s first rate hike in 11 years, will meet Thursday afternoon with the speakers of both houses of parliament to agree on the next steps, which will likely include an emergency vote after the summer. The ballot may take place on Oct. 2. Fall elections are unprecedented in Italy, a time when parliament is usually preparing the annual budget.

Draghi’s national unity coalition, established early last year in the depths of the Covid-19 crisis, unravelled on Wednesday after a rancorous parliamentary debate. His exit comes as the eurozone’s third-largest economy faces mounting challenges including slowing growth, inflation and higher borrowing costs.

“After yesterday’s debate I have drawn my conclusions,” Draghi said during a brief appearance at the lower house of parliament before his meeting with the president.

In the parliamentary debate on Wednesday, Draghi accused some members of his cross-party coalition of attempting to subvert his reform agenda and demanded that they recommit to it. But two centre-right parties – Matteo Salvini’s League and Silvio Berlusconi’s Forza Italia – together with the populist Five Star Movement led by Giuseppe Conte boycotted the vote of confidence in his leadership.

Foreign minister Luigi Di Maio, who led a walkout from Five Star last month in protest at Conte’s sniping at Draghi’s policies, called the government’s collapse “a black page for Italy”.

“We played with the future of Italians,” Di Maio wrote on Twitter after Wednesday’s developments. “The effects of this tragic choice will remain in history.”

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