A man checks a monitor with stock exchange data in Milan, Italy, Monday, Dec.10, 2012. Italy's stock market fell sharply and its borrowing costs jumped Monday as investors and European leaders worried over the country's political and financial future following Premier Mario Monti's surprise decision to resign. Monti said Saturday he would resign earlier than expected after Parliament passes the state 2013 budget, saying it was impossible to continue after the political party of former Premier Silvio Berlusconi withdrew its support in two crucial votes last week. (AP Photo/Luca Bruno)
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A man checks a monitor with stock exchange data in Milan, Italy, Monday, Dec.10, 2012. Italy's stock market fell sharply and its borrowing costs jumped Monday as investors and European leaders worried over the country's political and financial future following Premier Mario Monti's surprise decision to resign. Monti said Saturday he would resign earlier than expected after Parliament passes the state 2013 budget, saying it was impossible to continue after the political party of former Premier Silvio Berlusconi withdrew its support in two crucial votes last week. (AP Photo/Luca Bruno)
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In this photo taken at Chigi Palace government's office in Rome, on Dec. 6, 2012, Italian Premier Mario Monti ponders a question during a press conference at the end of a cabinet meeting. Premier Mario Monti told the Italian president Saturday, Dec. 8, 2012, he plans to resign following the sudden loss of support from Silvio Berlusconi's party, paving the way for early elections a year after the economist helped pull the country back from the brink of financial disaster. (AP Photo/Riccardo De Luca)
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German Chancellor Angela Merkel, left, talks with Italy's Prime Minister Mario Monti, right, and French President Francois Hollande during the Nobel Peace Prize ceremony at the City Hall in Oslo, Norway, Monday Dec. 10, 2012. The European Union has received this year’s Nobel Peace Prize in the Norwegian capital, for promoting "peace and reconciliation, democracy and human rights" in Europe for six decades following the tremendous devastation of World War II. (AP Photo/Yves Logghe)
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Foto del 2 de agosto del 2012 del presidente del Banco Central Europeo Mario Draghi en una conferencia de prensa en Francfort. Draghi difundirá el jueves un plan para comprar bonos soberanos de naciones en apuros dentro de los 17 países de la eurozona. (Foto AP/Michael Probst)
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El presidente del Banco Central Europeo, Mario Draghi, ofrece una rueda de prensa el jueves 6 de septiembre de 2012 en la ciudad alemana de Francfort, donde anunció un nuevo programa de compra de bonos entre las 17 naciones de la eurozona para favorecer un disminución en el costo de sus deudas. (Foto AP/Michael Probst)
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President of European Central Bank Mario Draghi is surrounded by media people at the beginning of a news conference in Frankfurt, Germany, Thursday, Sept. 6, 2012, following a meeting of the ECB governing council concerning the further strategies in the European financial crisis. (AP Photo/Michael Probst)
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President of European Central Bank Mario Draghi listens to questions as the Euro logo is reflected in his glasses during a news conference in Frankfurt, Germany, Thursday, Sept. 6, 2012, following a meeting of the ECB governing council concerning the further strategies in the European financial crisis. (AP Photo/Michael Probst)
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President of European Central Bank Mario Draghi approaches a news conference in Frankfurt, Germany, Thursday, Sept. 6, 2012, following a meeting of the ECB governing council concerning the further strategies in the European financial crisis. (AP Photo/Michael Probst)
News Summary: Italy elections threaten safety net
UNINTENDED OUTCOME: Italy's election has spooked global investors because it raises unsettling questions about the availability of the financial safety net that has kept Europe from catastrophe for the past six months.
CUT COSTS OR ELSE: The Italian vote rejecting austerity leaves the country vulnerable if its borrowing costs rise to unmanageable levels. The European Central Bank won't buy unlimited quantities of struggling countries' bonds unless the participants commit to austerity.
NO DANGER YET: So far, Italy's borrowing costs have risen only moderately. But the fear is that continuing turmoil could let them climb toward the heights of late 2011 and early 2012 — a hefty 7 percent.
Tags:
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