Nobody likes the fact that Italy’s sovereign debt load is 120% of its GDP. Investors know that Germany and the EU could conceivably bailout Greece, Portugal, Spain, and Ireland and survive. But they wonder if the European Union wouldn’t crumble if they had to bailout Italy, too.
What is Germany to do? When all the investors flee Italy and don’t want to buy their bonds, Germany and the ECB could decide to print money. But Germany would rather die. What’s the other answer? The Italians have to start thinking more like Germans. It sounds like a bad joke in terms of European history. Germans have been making jokes about Italians while appreciating their food and culture — and southern Germans their religion — for generations.
No, Italy, unlike the Balkan country called Greece, will never drop out of the European Union or anything to do with Europe. Italy is the source of modern European history. But still the Italians could decide to let the Germans manage the finances for them, set all the rules, and obey them as best they can. If the world can become politically Americanized, it can become economically “Germanized”. For that matter Americans could learn a thing or two from the more austere and frugal Germans while they’re at it.