STEVE CHIOTAKIS: Global markets are much lower today — again. And in Italy the cost to borrow money has shot up today. Italy’s one of the largest economies in Europe. And unlike other debt-laden countries before it, that has global investors a lot more worried about what will happen to the broader economy.
John Wyse is an economist with the European School of Economics in Rome, and he’s with us now. Hi John.
JOHN WYSE: How are you doing?
CHIOTAKIS: I’m doing well. We’ve obviously been hearing a lot about Greece and Portugal and Spain and all these other countries. How did Italy become the issue now?
WYSE: For a while, Italians used to think that they were out of the woods in terms of the crisis. They got assurances from the government in terms that they were not going to be facing a like situation that we’re seeing in Greece. But right now, this has been changing the last couple of days as the result of the tumble that the market took. And as a result of the extreme or some of the measures that the government has proposed.
CHIOTAKIS: We’ve heard a lot about “too big to fail.” Could Italy be too big to save? It’s the third largest economy in the Euro zone, right?
WYSE: Yeah, that’s correct. That’s the other thing that Italians feel that maybe since they are one of the founders of the European community and they’re one of the largest countries — failure of Italy would mean the failure of the whole European currency and the whole European monetary system. But the main not so much how Italy would get out, but how would Italy face a situation where by the interest rates would go up and the gap between the Italian borsa and the German boerse would get wider. And if that was the case, to what extent can Italy endure it, right? I think that would be more the concern before Italy getting out of the Euro.
CHIOTAKIS: John Wyse, an economist at the European School of Economics in Rome. John, thank you.
WYSE: OK, I appreciate your call.
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