Understand the banks and you save the euro
One can’t even see this crisis, and that’s the dangerous thing about it. Tens of thousands of Germans are on holidays in Italy, relaxing on the beach at Viareggio or strolling through the streets of Florence. They are not witnessing mass demonstrations as they did a few weeks back in Athens and Madrid. They see no hate posters against Germans, as they did in Dublin and Lisbon.
As a visitor, one doesn’t see right off whether a country is facing economic collapse. Whether the money is threatening to drain away from a particular country, and whether or not it can even find more donors. One doesn’t see the threat – even when it’s hanging over the future of a whole continent
Since the start of the week Italian government bonds have been in freefall. The international lenders have been pulling their capital out so quickly and so massively that it has taken even financial market insiders by surprise. It’s true that Italy’s economy within the eurozone was always a doubtful prospect. But Italy was always proof that a country with big problems can somehow muddle through. That, despite high government debt and simmering government crises, it was trustworthy – for tourists and investors alike.
Now the eternally shaky candidate is wobbling. And once the unthinkable becomes thinkable – the national bankruptcy of Italy – then the truly big disaster is coming nearer: the end of the euro.
The donors have already rendered their verdict: they are pulling their capital out of many of the EU countries. The talk is of a “Wall Street assault” on the euro by the remorseless financial markets that, following Greece, Ireland, Portugal and Spain, are now “taking a bead on” Italy.