In Italy, Silvio Berlusconi withdraws support for Prime Minister Enrico Letta's government, as all five center-right ministers pull out of the coalition.
For his part, Berlusconi blames Letta's inability to forge an agreement on fiscal measures. The parties' failure to reach a deal on Friday means a 1% sales tax hike will go into effect on Tuesday.
Letta (of course) says Berlusconi is attempting to turn attention away from his tax-fraud conviction: "In order to justify his crazy and irresponsible move, aimed exclusively at covering his personal problems, Mr. Berlusconi is trying to invert responsibilities, using the sales tax as an alibi."
Whatever the case, it's bad news for the country (and likely for its financial markets) as Letta will now have to consult with President Giorgio Napolitano on whether to call for new elections or attempt to forge a new coalition.
Equity ETF: EWI.