Even Italy's politicians are scared

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http://www.economist.com/blogs/newsbook/2011/07/italys-economy

ONE of the things most often said about Italy’s public debt is that it does not matter because most of it is held by Italians. The second part of that statement is true. But since the overall amount is so vast, even the total amount held outside of Italy—€790 billion ($1.1 trillion) at last count, in March—dwarfs the total for foreign-held bonds issued by countries like Ireland, Portugal, Greece and even Spain.

In May Business Insider, a website, made this point with a bar chart showing the Italian-debt holdings of some banks. It was entitled "Why an Italian Debt Crisis Should Scare the Crap out of Everyone".

That does not exclude Italy’s politicians. Today the lower house of parliament, the Chamber of Deputies, gave final approval, by 314 votes to 280, to an austerity package that was introduced into the legislature just four days ago. The bill was passed by the Senate yesterday.

A disquietingly high proportion of the spending cuts and tax rises in the package have been put off until after next year. And there are doubts about where some of the money will be found. But government and opposition politicians alike hope the speed of the bill's passage will impress investors and stem a panic that has caused the spread between Italy’s benchmark ten-year treasury bonds and their German equivalent to balloon.