As Rome Burns

The world’s on the edge of an economic apocalypse, and where are its leaders? The Riviera, The Hamptons, Martha’s Vineyard, to name a few. Well, even when they’re around, it’s hard to find a real leader among them. Reminds me of Nero as Rome was burning. The most recent European financial stress tests focused on Spain, Portugal, Ireland and Greece, and found American banks having minor exposure, making global contagion brought about by default and financial collapse unlikely.

However, an anonymous source on the Federal Reserve Board said “…if Italy goes, God help us all. “ That’s a very scary statement, particularly given Italy’s “la dolce vita” culture, happily ignoring sky high debt and slow-to-no growth for an eternity.

Now, however, as the rest of the world is realizing how “flat” and intertwined it really is, even the Italians are stirring. With a debt level of 120% of GDP, it’s the second highest in Europe after Greece. Last week, as Italy’s bonds were trading at more than 400 basis points higher than Germany’s, panic set in. Enough so that some of its leaders actually left their yachts or the beach to ponder what they might do about the situation.

And, this is where it gets even scarier. The New York Times quoted Pietro Scanzano, director of medical services for Italy’s national health agency, as saying, “We all know very well that the Italian economy is weak.” But Italians, he said, were generally reluctant to dwell on crisis situations because, from a psychological point of view, “the more we speak about problems, the more the problems increase.”

And, here’s another “la dolce vita” perspective from Mario Baldassarri, a lawmaker who is head of Italy’s Senate finance committee and a former deputy finance minister: “The problems may have increased, but they are the same as before, when there was no global crisis.”

Oh!! Okaaaay guys. Maybe all the world leaders should just stay on Holiday in perpetuity. At least they won’t be able to make the crisis worse.

Anyway, we don’t really want Italy to change, do we?