Italy teeters on edge of escalating debt crisis
By Anthony Faiola, Howard Schneider
Sidney Herald News
July 14, 2011
LONDON: Europe’s debt crisis is on the verge of engulfing its biggest victim, Italy, the world’s seventh-largest economy, whose size could thwart any international attempt to bail it out.
Italy’s woes have generated investor panic amid concerns of political infighting in Rome over budget cuts. More than anything else, investors appear to be losing confidence in the ability of bickering European leaders to come up with a lasting solution to the 20-month-long debt crisis, triggering a spread of the region’s financial woes from small nations such as Greece to the far larger economies of Spain and now Italy.
The addition of Italy to the so-called PIGS of Europe – Portugal, Ireland, Greece and Spain, financially troubled nations on the brink – marks what economists say is a serious escalation of the stakes. ”The crisis in confidence that has battered financial markets and hit Italy in recent days is a threat for everyone,” Italian Prime Minister Silvio Berlusconi warned on Tuesday.