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Berlusconi’s Business Success Still Tied To Political Fortunes

Shares of Prime Minister's TV network Mediaset rise -- then fall -- after surviving no-confidence in Parliament. Though Berlusconi still denies politics and business are linked, the markets disagree.

By Francesco Spini

MILAN – Earlier in the week, as Italian Premier Silvio Berlusconi faced a pair of crucial confidence votes, and riots broke out in the streets of Rome, the Milan stock market was watching.

The shares of Berlusconi's Mediaset broadcasting company had been slipping since November as the Italian leader faced a challenge from a group of rebel lawmakers that risked bringing down his government.

But after Berlusconi won the two votes on Tuesday, things quickly changed. Mediaset started bouncing back. The company's shares shot up 4 % on the Milan stock exchange in the immediate aftermath of his Parliamentary victory. They slowed down a little in subsequent hours, but closed up 3.29 %, at 4.63 euros. It was Mediaset's best result in three weeks.

Mediaset was one of the few stocks to do well on Tuesday. Another was ENI, the Italian energy giant that was recently cited in Wikileaks cables about the unusually close relations between Berlusconi and Russian Prime Minister Vladimir Putin, and energy deals between their respective countries.

For Mediaset, the run didn't last, with its shares closing down 1.29 % Wednesday, and continued to struggle through the week, as it became clear that Berlusconi's hold on power remains shaky at best.

But this is clearly how the market sees it, and has always seen it: Berlusconi means Mediaset. Traders continue to take into account the Berlusconi (the politician) Factor in the company technically run by his children and closest friends.

A portion of the value that is currently attached to Mediaset shares is embedded in the fact that Berlusconi is the prime minister. The market believes that when Berlusconi is sitting in the prime minister's palace, Palazzo Chigi, Mediaset is a little bit there with him, too.

It clearly doesn't matter how often Berlusconi repeats he has had nothing to do with Mediaset. "I don't even call the switchboard, lest somebody said the prime minister called…" Berlusconi once declared.

The market is convinced otherwise. And, according to Wikileaks cables, so are U.S. diplomats. In recent cables released by Wikileaks, the U.S. ambassador to Rome David Thorne suggests that a recent Italian communications decree may have been drafted to help Mediaset in its battle against Sky Italia, a subsidiary of Rupert Murdoch's News Corp.

Berlusconi has also come under criticism because earlier this year he appointed a longtime friend and TV executive, Paolo Romani, at the helm of the Ministry for Economic Development, which also deals with media and communications issues.

Under the center-left government headed by Premier Romano Prodi, Berlusconi's predecessor, Mediaset underperformed the market by some 30 percent. But Berlusconi is not like Prodi. Berlusconi is like a cat: and his survival in the recent confidence votes gives him yet another one of his nine lives.

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The Direct Link Between Turkey's Earthquake Toll And Global Real Estate Markets

The shoddy homes that collapse on their inhabitants in Turkey's recent earthquake were badly, and hastily, built as part of a worldwide real-estate fever typically fueled by greedy governments indifferent to safety norms and common sense.

Photo of a person walking in the aftermath of Turkey's earthquake

Aftermath of Turkey's earthquake

Hector Zajac


There is bitter irony in an earthquake striking a zone already decimated by terrorism and war, where the vulnerable must suffer from natural destruction on top of their rulers' cruelty or, at best, cynical indifference. Under such calamitous conditions, how is one to interpret the observation of Turkish President Recep Tayyip Erdogan that the February quakes that killed more than 40,000 were fate's work?

The countries hit, Turkey and Syria, lie on a seismic powder keg. They have shaken before and will keep shaking, and nothing can be done about that. But much can be done to prevent the natural vulnerabilities that threaten so many countries becoming disasters of Biblical proportions. Something can always be done to mitigate the harm of even a 7.8-level quake and its aftershocks striking at the end of a freezing winter night.

Talking of the clash of tectonic plates is confusing, as the scale can boggle the mind. But it refers to the movements of vast plaques, 70 kilometers thick, that rub against each other while shifting in opposing directions. Even without a cataclysm like the earthquakes, such movements can push up the ground a few centimeters a year to form mountain ranges over millions of years.

In this process, rocks on their edges accumulate enormous amounts of pressure that are suddenly released in quakes as they snap, before moving.

Our short time on this planet has amply shown the impact of a shifting earth on our fragile civilization and socio-economic organization.

And while science has evolved and can better predict earthquakes, it has yet to do it well enough to allow for a city's evacuation.

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