With an economy bigger than the rest of the PIIGS combined, a bailout of Italy’s enormous sovereign debt could prove impossible.Italy’s public debts are twice the maximum allowable for Eurozone countries. The Treasury has to come up with 500 billion Euros over the next three years. Even though the government has agreed to major spending cuts, there is so much wrong with their economy that nobody can be certain that they can keep up with payments.
Half of all government debt is held domestically, but Italian government and banks’ debt is spread far and wide. If Italy can’t pay its dues, banks all over the world will be vulnerable.
That's 20% of France's GDP and more than two times as much as Greece owes everyone.
Source: NY Times, Reuters
On July 11th, French banks BNP Paribas, Credit Agricole, and Societe Generale all fell by more than 5% on fears over Italy's ability to pay it's debts.
2.5% of German GDP depends on exports to Italy. Libya, Albania, Switzerland, and Romania also depend on exports to Italy. If demand in Italy falls, those countries and others will feel the pain.
Source: Washington Post, World Bank, CIA
The government owes almost $37,000 for every man, woman, and child in the country.
Just over half of Italian government debt is held domestically.
Italy is on the hook for about twice as much as it took to bail out Greece, Ireland, and Portugal put together.
Source: Bloomberg, Reuters
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