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Is Berlusconi really set to lead Italy again?

Mario Monti's resignation as prime minister of Italy has opened the door to Silvio Berlusconi's return to the office – and he has promised that he will run again in February's elections.

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If “Il Cavaliere,” or The Knight, as Berlusconi is known, did manage to win the election, he is likely to roll back many of the painful and unpopular reforms initiated by Monti and his unelected administration of technocrats.

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The election may not be for more than two months, but alarm bells started ringing on Monday, the first day of trading on the stock exchange in Milan, Italy’s financial capital, since the political drama that unfolded at the weekend.

Stocks closed down more than 2 percent and the spread between the yields on Italian and German sovereign bonds – seen as a key barometer of investor confidence – widened to more than 360 basis points, having been below 300 points before Monti’s resignation.

Fears that Berlusconi fails to grasp the dimensions of Italy’s economic malaise deepened on Tuesday when he said that worries about the spread were “an invention and a swindle” that had been wrongly used to bring down his government.

"Who cares about the spread?" the media mogul said. "The spread is a swindle and an invention which they used to defeat a government majority voted for by Italians that was governing the country.”

A chilly reception from Europe

Warnings of the risks that Italians run by reelecting Berlusconi came from across Europe, including the European Central Bank, the European Commission, and ministers in France and Germany.

The reaction from the European press was no less negative. “The Mummy Returns” was the headline in Liberation, a French newspaper, while Bild, the German daily, predicted a resurgence of the “bunga bunga” culture of showgirls and sex scandals that marked Berlusconi’s last stint in office.

The prospect of a comeback was also met with dismay and disbelief by Famiglia Cristiana, an influential Catholic magazine. “The dinosaur returns and throws the country into chaos,” said the magazine's lead editorial. “The penny whistler is playing once again, with tantalizing promises... that will halt the virtuous road towards reform.”

In a front page editorial, Corriere della Sera said that as Berlusconi strives for a fourth term, “the world watches us with incredulity."

Monti will officially step down after parliament passes the 2013 budget, which is expected in the days before Christmas. Elections must then be held within 60 days, with the date likely to be Feb. 17 or 24.

That means two months of hectic political jousting, market volatility, and soul-searching over the future of Italy.

“Journalists and political scientists,” says Professor Walston, "are going to have fun."

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