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Italy Will Fight Last Stand in Debt Crisis
Financial Times | June 21, 2011 | 01:06 AM EDT

For more than two years, we have witnessed the economic demise of several European countries. This soon led to the financial community systematically assessing the health of several peripheral southern European countries, tumbling investment grade ratings and spikes in required rates of return on government debt of these sovereigns. As the European Central Bank continues to dole out rescue packages, many are now looking for the next country to suffer a financial attack and wondering if the euro will even survive.

Some analysts feel that Spain is the last bastion for the euro’s survival. We do not. We believe that the final battle will be fought on the picturesque shores of Italy, resulting in Rome’s emergence as either hero or villain with respect to the survival of the euro.

Most European politicians dearly want the “run” on several of its “club” members to end and its rescues to restore confidence.

This is, unfortunately, a dream that is likely to be shattered as the next domino – Spain – suffers the scrutiny of intense solvency analysis.

Spain, which has almost twice the amount of government debt outstanding as Greece, has well known infirmities – namely an anaemic economy, an unemployment rate more than 20 percent, a devastating real estate debacle and a consequent banking crisis.

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