from the Guardian UK:
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1. Italy is the eighth largest economy in the world and the fourth largest in Europe. Its gross domestic product (GDP) was over $2tn in 2010. Greece, Europe's other basket case, has a GDP of $305bn – an economy about the same size as Dallas, Fort Worth and Arlington in Texas.
2. The country is label-queen heaven – Ferrari, Prada, Armani etc – and a major player in utilities, telecoms and banking. But the recession has put a strain on its economy and a succession of pop-up governments have failed to tackle fundamental problems, including the massive pension debts owed its ageing population. Italy's debts now top $2.2tn, or 120% of gross domestic product.
3. The debt matters because Italy is one of the world's largest markets for government bonds. Fears that Italy cannot pay what it owes on government debt have driven rates on Italian bonds to over 7%. The levels are higher than bond prices reached in Ireland and Portugal before they had to be bailed out.
.....(snip).....
10. US officials keep saying that US banks have little "direct" exposure to Italy. But US institutions have been snapping up credit default swaps (CDSs), insurance against credit losses. The value of guarantees provided by US lenders on government, bank and corporate debt in troubled eurozone countries rose by $80.7bn to $518bn in the first half of this year, according to the Bank of International Settlements. One, admittedly small, firm – MF Global – has already gone belly-up in the US thanks to indirect bets on Europe. If Italy goes down in a disorderly default, it will make the Lehman Brothers collapse feel like a Roman holiday. ..............(more)
The complete piece is at:
http://www.guardian.co.uk/business/2011/nov/09/italys-debt-crisis-ten-reasons-to-be-fearful