Some American journalists had gathered to welcome a new colleague to Rome, city of slow dining and trattoria, wine with food, everything in its place. So, of course, the event was held in an Irish pub, one of the city’s half-dozen or so — glass buckets of heavy foamy booze and crisps for dinner.

“Italy’s over as a story,” said one, “you arrived too late,” he said to the new guy, a grizzled war veteran, who’d earned the posting after years of donkey meat and friendly fire.

“Yeah, it’s done. Berlo’s over, and Foxy Knoxy’s [Amanda Knox, acquitted on appeal of murdering Meredith Kertcher] gone home.

“All we’ve got left is the death of the Pope.”

“It won’t be like JP2 though.”

“Don’t care, bring it on,” said one, raising his glass, “death to the Pope.”

The couple at the next table, most likely the devout from Donegal, fresh from a hard day kneeling in the basilica, look askance and start finishing their drinks.

“Berlo was in court today.”

“Tomorrow it’s going to be Ruby.”


“The heart stealer, star of the bunga bunga parties.”

“Why is she going to be in court? It’s just legal argument.”

“Because she wants to show off her baby bump.”

It all seemed a long way from the crisis. But that is in keeping with much of Rome. Unlike Greece, there is no visible sense that the country is starting to move into the crisis zone. Even reporting on Greece is exaggerated, but you can see the closed-down shops, new groups of homeless, and hear stories of tax strikes and people skipping meals.

Charities in Rome report a 20% rise in custom, but there is no sense of a public winding down, even as Europe speaks of default. The disjuncture prompted Berlo to make his now-notorious remark about “the restaurants being full”, an observation that may have played no small part in his demise.

“Greece is broke right now, but Italy can go for another two years at a 7% interest rate in bonds. It wouldn’t be good, but there’s no reason why crossing the 7% margin puts it in default territory,” one financial journalist noted.

“So why did 7% become this magic number? All of a sudden this was the point at which the bottom fell out of Europe?

“The argument is that once you go above 6, 6.5%, you can never can get it back down again. At 7% you’re in a permanent danger zone. But people are starting to see that the real danger is France.”

That was yesterday, of course, and these days, a day is a long time in European finance. France’s appearance on the radar of danger zones is, on the face of it, anomalous. Its bonds are trading at 4%, and its borrowing danger zone does not kick in until 10%.

But with its current performance, its debt load, and the exposure of French and German banks to southern European debt, among other factors, the EU’s left-side pillar is in danger of losing its triple-A rating, and that, it is said, would push the eurozone into a profound malaise.

Dexia, a French-German bank with major exposure to Greece, has already had one bailout. Yesterday, there were rumours of another on the way, at about €90 billion. Nor is it likely to be the last. Indeed, bailing out the banks may become a way of bailing out the eurozone nations via the back door — until the German, Finnish, Dutch, etc, public start to notice what is going on.

Then again today, it was not France that was the story but Germany — when a €10 billion bond offering, at about 2%, failed to sell out. Since no one is suggesting that Germany is not safe as houses, the failure is a measure of the zero-confidence that is held in the euro, and the eurozone as a unit.

At this point, Germany’s refusal to allow for a eurobond scheme, or other mechanisms of direct lending, starts to become self-destructive. Indeed today, European Commission President Jose Manuel Barroso used the crisis again to advance a strong federalist line — that fiscal policy, as well as monetary policy should come under the control of Brussels.

That makes sense in the abstract; there is no chance of it happening in reality. That really would cause a revolution in Greece, the full takeover of fiscal policy, and Germans in Brussels directly — rather than through local intermediaries — deciding who to sack from the public service.

Nor in Italy, where the breathing space offered by the appointment of Mario Monti has been resisted by the Right, and supported by the Left — in both cases because it is giving the latter a chance to regroup.

“We supported Monti because an immediate election would be a disaster,” says Marco Fedi, a member of the Democratic Party (the centre-left party that has had various forms, since the old party system broke up in 1994). “The crucial thing is changing the electoral law, or rather, reverting it.”

The current law, rammed through by Berlusconi, made the entire system “list” based, with no local members. That works in places such as the Netherlands, but Berlusconi made it impossible for people to vote for individual members, or change the order dictated by parties.

Berlusconi’s PDL (People of Freedom) list was then stuffed with numerous hacks, chancers, and “glamorous” women of few other qualifications. Indeed, one of the reasons Berlo was so spitting angry about the collapse of support, was that even TV weather girls he had appointed as MPs were deserting him.“The PDL set up a training facility for candidate selection,” Fedi said, laughing, “and explicitly said that aesthetics was a main criteria! When challenged on this, they said there was no reason why beauty and intelligence don’t go together! This is what we’ve been living through.”

Following Monti’s appointment, there is now frantic politicking to keep all parties together — on the left, there is concern that a collapse of PDL would prompt a defection of centrist groups from the PD, to create a new centre party. On the right there is concern that the fragmentation will be total.

Nothing holds the PDL together — a party, which, like Berlusconi’s earlier effort, Forza Italia, is halfway between a football supporters group, and the game shows on one of his terrible TV networks — save for Berlo’s charisma, now busted, and a hatred of the PD.

The only other people who hate the PD more, are those they might have to work with in a coalition, the two main Communist groups — Refoundation and Italian Communists.

“But we are too busy hating each other,” says Marco, a long-suffering Refoundation member, in a cafe south of the city’s enormous Termini railway station.

Here, the tourist pizzeria give way to graffiti, immigrant bars, magazine offices, and “social centres” around which groups — far to the left of the Communists — organise. Marco agreed to tell me about the multiple splits and collapse of support that’s characterised Italian communism since 1991, but it quickly becomes clear that it is  impossible, and a little futile.

Refoundation, which once commanded 6% of the vote, has been beleaguered by arcane factionalisation leading to splits, followed by a minimal degree of recombination. Some in the PD look on coalition with it in open fear, which is why there is the possibility of a total transformation of the existing party system.

Take this, and double it with Greece, add in Spain, and it becomes clear that a fully federalised Europe with a central fiscal policy — and one that would almost certainly benefit Germany and the north — is not on the cards.

So Europe remains stuck in a common currency whose structural flaws it cannot resolve — and certainly cannot resolve without major reform in Italy. Is there any chance of that? One half-Italian journalist, discussing schooling options for her children, breaks off to answer that point:

“Italians, they want everything, but they don’t want anything to change. That’s why I’m sending my kids to an English boarding school — so they won’t be wrapped in cotton. Nothing will change.”

“Nothing will change, Berlo’s new CD gas been released today …”

“And the Pope must die!”

“And the Pope must die!”