It's Italy I tell you

Gosh! This is getting serious. Until now I've had the view that the Eurozone peripheral debt crisis would be contained. After all, Greek, Portuguese and Irish sovereign debt is only 7% of total Eurozone GDP. It's containable. A Euro fiscal union could easily cope with it. Structures to reduce debt and interest payments are quite feasible and have been set up in other situations. During the 1980s Latin American bank loan crisis, Citigroup and other banks were effectively bust but at the end of the decade the Brady bond mechanism changed the landscape for debtors and creditors. So far, Eurozone politicians have done the right thing each time they've looked over the abyss. Even this week, Italy passed an austerity budget with support across the political spectrum. Problem is that Italy's debt is more than Greece, Ireland, Portugal and Spain altogether. It can't be 'bailed out.' A negative, self-feeding loop is possible if Italian bond yields start spiralling up. It's scary. Politicians can be overwhelmed by events. See - Russian debt crisis, WW1, etc. The QSL is from Radio Maria, a religious broadcaster in Italy with just 1 kW, heard in London on 41mb in 1997.