Greece is a sideshow, Italy is now the story

ON EUROPE

Each day brings a fresh development in the eurozone crisis. At the time of writing, the Italian ten-year bond yield has just breached 7%, a level more consistent with its pre-euro lira days.

Of all the major countries, Italy is the Achilles heel of Europe. Berlusconi has presided over an appalling GDP growth record and bond markets have lost patience with the country’s debt burden. Any predictions about how this situation will pan out are likely to be folly. There are too many moving parts to the story to say with any confidence what the outcome will be. While comparisons with autumn 2008 are understandable, it seems unlikely Europe will plunge into an economic abyss as it did three years ago. This time around the corporate sector is much healthier. Companies are awash...