Berlusconi Roils Stocks With News He Says He Heard on the Radio

By Steve Scherer

Oct. 11 (Bloomberg) -- What Silvio Berlusconi giveth, Silvio Berlusconi taketh away.

In a quick reversal mirroring the financial markets' volatility, Italy's prime minister said world leaders were thinking about shutting down financial markets and then retracted the statement less than an hour later.

``The idea of suspending the markets for the time it takes to rewrite the rules is being discussed,'' Berlusconi said yesterday after a Cabinet meeting in Naples, Italy. A solution to the financial crisis ``can't just be for one country, or even just for Europe, but global,'' he added, just after U.S. trading had begun in New York at 9:30 a.m. in New York.

Less than an hour later, Berlusconi, 72, corrected himself: ``The hypothesis wasn't put forward by any leader, including myself,'' he said. His explanation for the earlier statement: ``I heard it on the radio.''

Berlusconi's comments followed other gaffes he's committed during his political career.

``He can do these things in Italy, but he can't get away with it when he is dealing with something worldwide,'' said James Walston, professor of politics at Rome's American University. ``He is a world leader, but he's out of his depth.''

The White House denied any plan to shutter Wall Street about 55 minutes after Berlusconi's initial comment. Berlusconi's retraction came minutes after that. During that hour, the Dow Jones Industrial Average, which had fallen as much 8.1 percent in early trading, rebounded into positive territory briefly and then went back down again. The index closed down 1.5 percent in New York.

About-Face

The prime minister's about-face came as Group of Seven finance ministers and central bankers prepared to meet in Washington to discuss ways to shore up the international financial system and investor confidence. The U.S. and European countries are bailing out banks to stave off the kind of economic collapse that led to the Great Depression more than 70 years ago. After central banks cut rates globally this week, political leaders are still struggling to come up with a coordinated response.

Italy roiled matters again later in the day, when Finance Minister Giulio Tremonti said it wouldn't endorse the current draft statement drawn up by the G-7.

``The current draft is too weak,'' Tremonti told reporters in Washington before the talks began. ``We won't sign it.''

Not First Time

Berlusconi's misstatements earlier yesterday weren't his first. In 2003, the day he took over the European Union's six- month rotating presidency, Berlusconi likened a German member of the European Parliament, Martin Schulz, to a Nazi concentration camp guard.

The comments strained relations between Berlusconi and then- German Chancellor Gerhard Schroeder. Berlusconi later apologized both to the German leader and to the European Parliament.

At a New York event sponsored by the New York Stock Exchange in 2003, he said people should invest in Italy because its women are pretty.

``We have beautiful ladies and beautiful women, so my suggestion from the bottom of my heart is to try to make investments in Italy,'' Berlusconi said. ``The secretaries are beautiful.''

Shortly after the Sept. 11, 2001, attacks on New York and Washington, Berlusconi said Islamic countries were uncivilized and that Western countries would need to ``conquer'' them in order to bring them into the modern world.

In 2006, during his election campaign against former Premier Romano Prodi, he said people who voted for his rival were ``coglioni,'' a vulgar term for testicles.

``My greatness is without question,'' Berlusconi said in March 2001. ``My human substance, my history, other people dream to have.''

To contact the reporter on this story: Steve Scherer in Rome at scherer@bloomberg.net