Now it is up to Italy

Oh dear - more economic troubles make the headlines. How boring, dreary. Isn't there a good human interest story out there? Despite all our wishes, this week we'll probably have to go with Italy - the third largest economy in the Eurozone behind Germany and France - that is now facing its own economic crisis.

Italy has a population of 60 million. However, the demographic math is grim: Italians represent Europe’s oldest population, are now living 30 to 40 years beyond retirement. But Italians make only 1.3 babies per couple, a record European low. The potential workforce, therefore, is shrinking at the same time that the number of needy pensioners is on the rise.

Now that Greece has been brought to the point where it is seriously addressing its budget and societal issues, Italy becomes the next biggest worry among the developed countries of the world due to its high debt. Though Italy's annual budget deficit is quite low, public sector debt is over 110% of GDP, which is giving cause for concern. The problem is that it is quite difficult to reduce this debt given how much the country must spend simply on interest payments.

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Italy's immediate economic crisis is its questionable ability to pay down more than just the interest on its large debt

There are a number of reasons Italy has a tough future in front of it ... poor competitiveness with other modern economies, a combination of political instability, corruption and poor productivity growth, an aging population, all of which leads to low consumer confidence which when combined with austerity spending cuts could result in a recession.

With all this in front of the nation, the current embattled and provocative Prime Minister Berlusconi agreed to resign upon Parliament passing spending cuts designed to address the country's structural economic problems. That occurred Friday in Italy's Senate and on Saturday in Italy's House, resulting in his resignation hours later.

Public sector unions have led the opposition to government attempts to reduce spending.

Upon hearing the news, crowds erupted in cheering and applause Berlusconi, one of Italy's richest men and the owner of a large portion of the Italian media, was booed and heckled by crowds as he was driven to and from the presidential palace. Shouts of "Shame!" and "Buffoon, buffoon!" were directed at his motorcade.

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Italian Prime Minister Silvio Berlusconi, shown here preening at a group photo at a G20 summit in Cannes, France on Thursday, Nov. 3, 2011. (Argentina's President Cristina Fernandez de Kirchner to the left and German Chancellor Angela Merkel to the right.) Berlusconi was involved in numerous sexual scandals during his 17 year political career.

So a little emotional catharsis, and now we can hope that a new Prime Minister can lead the country through what will be a painful process of reducing its spending to within the capacity of its economy, while forcefully acting on corruption and entrenched factions enriching themselves.

Who's next?