When historians write the history of the eurozone debt crisis, two Italians may well be the most interesting characters in the tale.
One is Mario Draghi, president of the European Central Bank, who with three simple words — “whatever it takes” — soothed fears of a euro breakup and sent peripheral yields racing downwards in July last year.
Few remember that in that same speech, Draghi likened the eurozone thus far to a bumblebee — no one knows how it flies, yet it does — that had to graduate to being a real bee.
Draghi may not have had his compatriot in mind when he made the speech, but bumble would be an apt word to describe Berlusconi’s influence on Italy’s standing in the markets — and no one can quite work out how he stayed in power for so long.
But not anymore. His legal woes — specifically tax fraud — have finally caught up with him and he has no appeals left.
Now it seems many of his political allies are abandoning him, as rumours grow that moderate members of Forza Italia will back Letta.
The drama of Italian politics may eem better suited to the stage at La Scala rather than two house of parliament, but it’s unlikely those politicians with serious ambitions have forgotten or are willing to overlook the last time Berlusconi had a big effect on the market — when in November 2011 Italy auctioned two year debt at a 7.814% yield, just before Berlusconi stood down and the technocrat Mario Monti took over.
The rebels in Berlusconi’s party may be backing Letta for honourable, opportunistic or practical reasons, but it is undeniable that Berlusconi’s star is waning. And that can only be a good thing for markets.
If — and it is still a big if — Letta can come through the confidence vote, then his government will have passed a major test and that should provide investors with confidence that Italy has a stable executive ready to tackle its underlying economic woes.
That such a vote should also be the final nail in the coffin of the career of a man who has done more to suck the life out of Italy’s credibility among investors than anyone else in the past two decades is a bonus.
And even if Letta loses the vote and Italy faces a second round of elections this year, it looks unlikely that Berlusconi will have much say in matters.
Either outcome, for Italy, is a good one.