by Calculated Risk on 11/08/2011 12:44:00 PM

Update: Reports are Italian Prime Minister Silvio Berlusconi will resign after 2012 budget is approved.

First Greece:
• The Athens News is reporting Lucas Papademos will be the interim Prime Minister and that elections will be held on Feb 19th. "Lucas Papademos, an economist and former central banker, will be the new prime minister of Greece, a ruling Pasok source has told Reuters."

• The EU is asking for all parties in Greece to sign a committment letter. However New Democracy leader Antonis Samaras is balking. From the Athens Times: Samaras sees written committments unnecessary

New Democracy leader Antonis Samaras has maintained his opposition this evening to European demands that Greek leaders sign a letter in support of the October 27 Eurogroup agreements for Greece as a condition for disbursing the 6th tranche of bailout loans.

"There is national dignity. I have already and repeatedly explained why, in order to protect the Greek economy and the euro, the implementation of the decisions of October 26 has become inevitable. I will not allow anyone to doubt my word" he emphasised, in an official announcment.

The European Union has asked Greece to produce a letter promising implementation the bailout deal and have it signed by the outgoing and new Greek prime minister, the finance minister, the opposition leader and the central bank chief, a minister told reporters on Tuesday.

The Greek 2 year yield is up to 105%, and the Greek 1 year yield is down to 221%.

On Italy:
• The Italian 10 year yield is at 6.77%.

• From the NY Times: Berlusconi Loses Majority After Ally Asks Him to Resign

Prime Minister Silvio Berlusconi of Italy won a budget vote in Parliament on Tuesday but the tally showed that he no longer has the support of the majority, a huge humiliation that raised the pressure on him to resign in the face of an escalating debt crisis that has hobbled Greece, threatens Italy and could infect the rest of Europe.

• From the Financial Times: Live blog: Eurozone crisis

Berlusconi is due to meet Giorgio Napolitano, head of state, in just over an hour. Napolitano, 86, the most respected political figure in Italy according to opinion polls, is expected to suggest that the prime minister step down in the national interest.

Greece is just a sideshow now - this is now about Italy and the entire EMU.