Image: Jim Jubak

Jim Jubak

If you needed proof, the stock market moves of the last few days should have convinced you that the eurozone debt crisis is a political crisis and not, now, a financial crisis.

That's not to say there aren't financial repercussions. The effects on European, U.S. and developing-country financial markets are huge. And I hate to say this, but we've just started to see the capital crunch at European banks ripple out into the global economy.

But Wednesday's huge sell-off was primarily a judgment on the politics of Italy, the European Central Bank and Germany. The market said loudly and clearly that it doesn't think the leaders of those bodies have the political will to fix the crisis now engulfing Italy. And without that political will, the next step is the breakup of the eurozone.

Not right away. But the market is saying the breakup is certain. Prove us wrong, investors who are selling the euro are saying (as is the global economy). And so far, the silence is deafening.

Arrivederci, Berlusconi?

On Tuesday, the market got excited -- by Italian politics. News that Italian Prime Minister Silvio Berlusconi had promised to resign after the Italian Parliament approved a new austerity package required by the eurozone produced a rally in European and U.S. markets.

And then, overnight, the markets focused on exactly how vague that promise was and on the dysfunctional realities of Italian politics. The austerity package that was supposed to lead to Berlusconi's departure hadn't, as of Wednesday afternoon, been delivered to the budget committee of the Italian Senate.

On Thursday, Italy appeared headed for a Friday vote on the package, and the uproar calmed down a bit. Reports that the European Central Bank was buying Italian bonds to keep yields down also helped.

But what happens beyond Friday? If Berlusconi resigns, will he be followed by a caretaker government of technocrats (as many hope) that could push through austerity measures and economic reforms?

Frankly, it doesn't look like any of the proposed leaders of such a government would have the political backing to get the needed changes into law.

And maybe, politicians like the Northern League's Umberto Bossi were saying, any post-Berlusconi government should be headed by the leader of Berlusconi's party.

And maybe rather than a caretaker government to push through reforms, everything should wait for new elections -- in February or March.

In other words, nothing in Italy might change at all. Which is exactly what the financial markets fear.

But Italy could act. The Italian crisis is actually easy to fix compared with that in Greece, for which there may not be any solution except default.