I know you don’t think Greece is a big deal, but what about Italy? Big deal, maybe or nothing?

I know you don’t think Greece is a big deal, but what about Italy? Big deal, maybe or nothing? –@wesbroxson

You’re right. Greece, with 0.15% of the world’s population, and a similar affect on the EU GDP as Rhode Island has on the US GDP, doesn’t concern me at all.

Italy is of course bigger, and one of the largest borrowers in the world. But let’s not forget, the headlines were all panicky about Greece. So now they are all panicky about Italy. So you have to take headlines with a grain of salt and let’s look at the reality:

Italy managed to borrow $150 billion the other day at much lower yields than people had predicted.

I looked down the list of the largest banks that lent Italy money and I did not see ANY US banks on that list.

Italy, unlike Greece, is made up of people who are increasing their savings rather than decreasing it. So the money is there and now it’s up to the government to get them to spend it (as opposed to putting in austerity measures).

Mario Monti, an economist, will be the new Prime Minister and provide a much needed injection of confidence than the scandal-prone Berlosconi

Let’s not forget, NOBODY in Europe has actually defaulted yet. And our top 5 banks have only 8% exposure to all the PIIGS countries.

Compare this with 1981: Almost the entire continent of South America defaulted. And our top banks were 263% (!) exposed to their debt. What happened? We went on a 20 year stock market boom.

So I don’t read the news. I don’t panic. I ignore the headlines. Italy is a nice place to eat dinner and sight see but I’m not going to ever think again about their debt.


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