Banksters set their sights on Italy

[n2doc]

Krugman- OK, folks, this is getting really serious. Spain is bad enough, but Italy …
(see chart at link showing italian 10 year rates going through the roof)

Italy has puzzled me a bit. On one side, it has a lot of debt (net 99 percent of GDP), and if you look at prices and wages it looks almost as overvalued as Spain. On the other side, Italy’s deficit isn’t nearly as bad (5.1 percent in 2010, sez the IMF), and the economy doesn’t seem to be suffering as much as you’d expect.

But now Italy’s under pressure too.

I still don’t see a wide euro breakup. But I guess it’s worth posting, for future reference, one thought I have here: namely, that a rump eurozone, without the southern Europeans, doesn’t look workable to me. It’s not about economics per se; it’s about political economy.

One thing that’s really essential for the euro to work as a political matter is for Germany not to be too dominant. We can’t really have a North American Monetary Union, because the US is too dominant: either it’s just American monetary hegemony, or America takes an unacceptable loss of sovereignty to minor partners. Europe, by contrast, has four and a half big economies; Britain chose not to be in, but that still left France, Italy, and Spain to share the running of the thing. But France, Germany, and a few Flemings and Walloons doesn’t make for anything that even looks like an equal partnership.

Just saying.

http://krugman.blogs.nytimes.com/2010/11/30/the-italian-job/