In the recent Italian elections, incumbent Prime Minister Mario Monti recieved a paltry 10 percent of the vote.
In part it was because people didn't like his austerity/reform policies, but the real reason he was so disliked is that he was seen as a "puppet" for Brussels or Angela Merkel, doing their bidding in Italy.
People do not like it when outsiders are calling the shots.
Since the Eurozone crisis started, Germany has basically called the shots. This may be more de facto than de jure, but as the richest country, with the largest coffers, policy has essentially gone by what the Germans want.
This is an unfortunate political reality.
And now we see this on display again.
I think the Cyprus deal as it stands a big deal indeed, mostly in terms of bad signaling (as the ongoing normalisation in Eurozone capital flows remains fragile and vulnerable to sudden stops) and politics ( Germany still imposing its rules despite growing discontent in the South ).
There were multiple reports which indicated that Germany told Cyprus: Confiscate your depositors' money or leave the Eurozone.
That's a terrible political dynamic, and on top of Italy it exacerbates a bad overall political situation.
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