Italian govt falls, economy sputters.

Italy's coalition government has unraveled with the resignation of 5 Ministers from Berlusconi's Party. The immediate cause was the attempt to expel Berlusconi, because of his tax conviction.

The country's economic problems flared again: July's economic numbers came in as  a drop of 1.1% instead of the expected increase of 0.3%. The government planned "reforms" (read tax increases and increased spending) and the Center Right rebelled. What reforms? Sales tax was about to go from 20% to 21%.

Italy's borrowing costs are rising again as 10 year notes increased yield from 2.4% to 2.7%, in spite of ECB guarantees. Ironically, Spanish conditions improved, even if only marginally.

Europe's economy is not improving much as shown by a drop in inflation, which is reported as 1.1%.