As share prices were falling and bond yields were rising in Italy last week, there was plenty of alarm on international financial markets but there were fresh statistics on the streets of Naples that almost went unnoticed .

Three people were gunned down within 48 hours in the Mafia strongholds of Secondigliano and Scampia provoking  fears of a new feud among  clans from the local Camorra and underscoring the power of the Mafia in the south.

Politicians talked of grand plans to export the hundreds of tonnes of stinking garbage lying on the streets of Naples, while adding 60 new workers to the 1500 who are supposedly employed to clean its parks, gardens and public buildings.

And the regional council of Campania that surrounds Naples defied its opponents and voted to expand the number of councillors from 12 to 14.

So much for austerity.

Naples has never been representative of the country but these statistics do little to enhance Italy’s international image or that of its political leaders as it seeks to reassure investors it is serious about improving efficiency and cutting costs.

In one of the most turbulent weeks in recent memory, Italian 10-year bond yields surged to 14-year highs last week and Milan stocks fell 13% as billions of euros were wiped off international markets.

Italian Prime Minister Silvio Berlusconi and his Finance Minister Giulio Tremonti overcame their personal differences and called a hasty media conference late Friday to reassure investors and accelerate plans to balance the budget — from 2014  to  2013.

But details were sparse and there was no sign that the generous benefits paid to the country’s MPs would be slashed.

“Social butchery” was how commentator Antonio Padellaro, from left-leaning daily Il Fatto Quotidiano described the government’s  bid to cut pensions and other benefits in its proposed €48 billion austerity package.

“Not one word on tax evasion : €240 billion a year extracted from the public purse,” he said.

As dozens of Italian MPs  look to forfeit their  summer holiday to consider the proposed cuts and other structural reforms that have not been enunciated,  all eyes will be on the markets on Monday.

Late Sunday, the European Central Bank said it would intervene decisively to protect Italy and Spain from an accelerating debt crisis, making it clear it would buy government bonds of the euro zone’s third and fourth biggest economies.

Commentators described the agreement of the bank’s policy-making governing council as a watershed for what was a divisive issue for the ECB and after some bond buying last week failed to contain the fallout to Europe’s larger economies.

“The euro system will intervene very significantly on markets and respond in a significant and cohesive way,” one source said.

But when financial markets open today, Berlusconi will be at his luxurious villa on the Costa Smeralda in Sardinia, one step removed from the reaction to deficit-cutting measures he announced late last week.

Investors are very nervous as last Friday’s US debt downgrade added to the eurozone’s sovereign debt crisis and there are continuing fears that Italy may be the next domino to fall from overwhelming debt burdens as we have seen in Greece, Spain and Ireland.

With Italian debt running at 120% of GDP and continuing signs of low economic growth, there is pressure on Italian leaders from employers and unions to do far more to stimulate growth.

There was little comfort to be had from Berlusconi’s reassurance to Parliament last Wednesday.

“You are listening to a businessman who has three companies on the stock exchange and who is in the financial trenches aware every day of what is happening in the markets”, the 74-year-old billionaire  said.

If there is a fresh sell-off in Italian bonds after last week’s steep sell-off that could further weaken the European banking system and there will be more drama ahead.

But James Walston, professor of international relations at The American University in Rome, summed up the country’s most crucial deficit.

“The crisis is caused by real flaws in the system and the numbers behind them, but above all, it is the result of lack of leadership,” Walston said.