Italian Prime Minister Mario Monti speaks with traders while visiting the floor of the New York Stock Exchange on February 10, 2012 in New York City.
Italian Prime Minister Mario Monti speaks with traders while visiting the floor of the New York Stock Exchange on February 10, 2012 in New York City. - 
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Jeremy Hobson: Well now to Europe where the focus has been on Spain for a while, but today Italy stole the spotlight when its credit rating was downgraded by the credit rating agency Moody’s to just two levels above junk status.

For more let’s bring in Marketplace’s European correspondent Steven Beard, good morning.

Steven Beard: Hello Jeremy.

Hobson: So, do we need to be worried about Italy now, Steven?

Beard: Well, this is pretty serious. Italy is the big one. It’s the eurozone’s third largest economy, it has more than $2 trillion worth of government debt. It’s too big to bail with the existing bailout fund but it’s also too big to fail; if it defaulted it really could rip the euro apart.

Daniel Gross is with the Center for European Policy Studies in Brussels, he says this Moody’s downgrade is a damaging blow to confidence.

Daniel Gross: We should be very concerned. If everybody thinks Italy is going down the drain, the Italian economy will deteriorate and in the end it might go down the drain.

Beard: And some Italians are even looking to the former Prime Minister Silvio Berlusconi for salvation.

H0bson: Silvio Berlusconi? I thought he was pretty much done when it came to leadership in Europe?

Beard: Yes, they failed to drive a stake through his heart, Jeremy. He may have been ridiculed out of office -- he’s actually still on trail for paying for sex with 'Ruby the heart stealer,' a 17-year-old, but Silvio, according to reports, would like to make a political comeback, he’d like to be prime minister again and he would apparently, promise to pull Italy out of the eurozone.

Hobson: Well, while we got you here, Steven, I want to ask you about another big economy in the eurozone, France where the new socialist government is really trying to set an example with austerity measures.

Beard: Yes, indeed, and some observers say, this shows you how serious things are in the eurozone -- when French socialists start taking their snouts out of the trough. They do have a reputation for living fairly high of the hog. The new president is positively slumming it, taking the train to Brussels rather than the presidential jet, ministerial salaries are cut by 30 percent and Champagne is out at official receptions, it’s been replaced by a cheaper white wine called Muscadet, they must be drinking that through gritted teeth.

Hobson: Marketplace’s Steven Beard in London, thanks a lot.

Beard: OK, Jeremy.

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