Italy The Next Euro Zone Crisis Country?

With the Greek financial crisis still working itself out, European politicians are beginning to worry about another country that could go into crisis very soon:

With fears growing that Italy could become the latest victim of the euro zone’s sovereign debt crisis, and with plans for a second Greek bailout deadlocked, top European officials are to meet on Monday to wrestle with the mounting threats to the currency union.

Euro zone finance ministers had previously scheduled two days of talks to begin on Monday afternoon in Brussels. Over the weekend, a meeting of more senior officials was also set for Monday morning.

A spokesman for Herman Van Rompuy, the president of the European Council, denied that the senior officials would discuss the market’s fears about the precarious state of Italy’s finances. But another official, who requested anonymity because he was not authorized to speak publicly, said Italy would most likely be on the agenda.

On Friday, the spread of 10-year Italian government bond yields over their German equivalents widened to 236 basis points, the most since the introduction of the euro, and the country’s blue-chip stock market index, the FTSE MIB, fell by 3.5 percent. Investors were unnerved by evidence of a growing divide between the Italian prime minister, Silvio Berlusconi, and the finance minister, Giulio Tremonti.

A sovereign debt crisis in Italy could become a serious problem for the rest of the continent, and by extension the world economy.

 

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Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook