20111109 silvioberlusconi
This file picture taken on June 1, 2011 at Palazzo Chigi in Rome shows Italy's Prime Minister Silvio Berlusconi (R) listening to the government's undersecretary Gianni Letta. Gianni Letta -- dubbed 'The Grand Vizier' -- is a silver-haired Catholic who spent much of his career in Silvio Berlusconi's shadow but played a key role in calming often fraught diplomatic situations. - 

Kai Ryssdal: The nightmare scenario you're hearing from a lot of experts this week goes something like this: If you thought a Greek default was scary, it's nothing compared to what happens if Italy goes under. Except, as sometimes happens -- the experts aren't right. And Italy is not Greece.

Here's our senior business correspondent Bob Moon.

Bob Moon: At first glance, the dire comparisons seem plausible. At Brown Brothers Harriman, analyst Marc Chandler understands why the surge in Italian borrowing rates to 7 percent is setting the world on edge.

Marc Chandler: That was what seemed to be the trigger for the other peripheral countries like Greece to go hat-in-hand to international agencies to get money.

But Chandler says Italy has the means to make good on its debt. At New York University, finance professor Ed Altman says at least Italy can back its obligations with real assets.

Ed Altman: Fashion, technology, energy and a very wealthy private and corporate sector -- which Greece does not have, and there's no chance for a country to survive over the long run without some sort of competitive advantages.

In fact, analyst Marc Chandler figures that even were Italy forced to pay 7 percent interest on all its debt, it could manage the additional cost.

Chandler: Now, 140 billion euros seems like a lot of money, and it is a lot of money -- but Italy anticipates collecting 500 billion euros in taxes next year.

Investors are worried, though, that the Italian government lacks the commitment to reforms needed to keep that money flowing. And the Brookings Institution's Domenico Lombardi points out a meltdown of Europe's third-largest economy could set off shockwaves many times greater than Greece.

Domenico Lombardi: Whatever happens to Italy will have a truly systemic impact throughout the global financial system.

But in Rome, John Cabot University President Franco Pavoncello says don't count Italy out. He suggests there's a more apt comparison than Greece.

Franco Pavoncello: Whenever you push Italians to the wall, they become German. They become very tough.

I'm Bob Moon for Marketplace.