ROME – It wasn't the charges of tax evasion, bribery, influence peddling or even paying for sex with a 17-year-old girl that brought down Italian Prime Minister Silvio Berlusconi.  On Tuesday, Europe's fast-growing debt crisis claimed its latest victim in Berlusconi, who has led Italy for 11 of the past 17 years. He vowed to resign after shepherding the country's economic austerity package through Parliament, creating at least some short-term relief for Europe's fourth-largest economy.  If Berlusconi steps down, it will mark the fourth European government felled this year amid costly bailouts and emergency austerity measures.  It was a surprising turn for the seemingly indestructible 75-year-old Berlusconi whose troubles include historically low approval levels, the defection of key political allies and court case after court case that have continued to dog the Italian leader.  The colorful-if-gaffe-prone leader who won worldwide notoriety for making remarks such as describing President Obama as "handsome, young and also sun-tanned" and bragging about his dalliances with young women had people around the world shaking their heads at times.  Even those who said they supported Berlusconi and enjoyed his antics thought it was time for him to go.  "People are out to get him, and it's unfair," said Irene Viterbese, 30, a beauty salon worker in Rome, "but I also think that the situation in Italy is getting worse and worse, and he can't seem to do anything about it. He's getting old. He has his own problems. Maybe he should go for the good of the country."  In Italy, the dramatic developments came after Berlusconi's allies failed to achieve a parliamentary majority on a budget measure that had been seen as a vote on Berlusconi's leadership. Berlusconi mustered 308 votes of support in the 630-member chamber.  Berlusconi later announced he would resign after the approval of the budget measure, which contains spending cuts and reforms demanded by the European Union finance ministers.  The dramatic news from Italy came at the same time Greek Prime Minister George Papandreou prepared to officially resign and party leaders worked to hammer out a deal to install a government that would be able to implement a European Union rescue package agreed to last month.  Earlier this year, Ireland and Portugal saw their governments collapse under the weight of debt fears.  In Italy, the political uncertainty drove the cost for the government to borrow money to its highest level since the euro was introduced nearly a decade ago. The yield on benchmark 10-year bonds reached as high as 6.74% before the parliamentary vote, precipitously close to the 7% level that sparked the government collapse in Greece and in Ireland and Portugal.  "We have to be cautious with parallels with Ireland and Portugal, because Rome goes into this crisis with a much stronger budgetary position than either of those two countries," said Jan Randolph, head of Sovereign Risk at IHS Global Insight. "Italy collects more in taxes than the government spends, giving it a strong positive cash flow."  Even so, the rising bond yields raise the cost for the government to borrow money, making the prospect of paying down the country's massive debt — which is worth $2.6 trillion, or 120% of the country's gross domestic product — even more daunting.  Italy's economy is nearly three times larger than those of Greece, Ireland and Portugal combined. It is unlikely that the European Union would be able to raise enough capital to bail the country out if it must default on its debt payments.  A failure of any kind in Italy would have dire repercussions for the eurozone as a whole.  "If Italy gets to the same state Greece was in, it would no longer be possible to have the euro currency," said Luca Silipo, a former Italian Central Bank official and now an economist with Natixis SA. "If Italy goes bankrupt, then France will be next.  "You clearly don't want Italy to have the same problem as Greece," he said.  Notwithstanding its political developments, Italy could be headed in the same direction as nearby Greece, analysts said. Though Italian markets are expected to Wednesday, that may be a short-term trend.  "If Berlusconi goes, the markets will probably respond positively … (but) the underlying economic problems remain, and there is no easy fix," said Javier Noriega, a senior economist with investment bankers Hildebrandt and Ferrar. "I don't know if the Italian public has gotten its head around the fact that it's going to get much worse in Italy before it gets better, and that there is a lot of difficult work ahead."  Carsten Brzeski, economist at ING financial group in Brussels, agreed.  "Italy is, in terms of growth, the sick man of Europe," he said. "The country has very, very sluggish growth. It is not a recession like in Greece or the other peripheral countries. We all know that Italy is too big to fail. They cannot be rescued or bailed out by the other European countries, they need to do it themselves otherwise the eurozone has big problem."  In the end, one Berlusconism came to pass: In 2006, he quipped: "I am the Jesus Christ of politics. I am a patient victim. … I sacrifice myself for everyone."
Europe's debt crisis claims another head of state as premier loses his parliamentary majority during a routine vote.