'The United States was actually doing relatively well, sluggish but going forward until Italy ran into trouble," he said. "That destabilized the European system, and the crisis re-emerged. Europe is very critical to the United States in the sense not only do we have a fourth of our experts there, but more importantly, significant proportion of the foreign affiliate profits, in fact half of U.S. corporations, are in Europe."
"When Italy showed signs of significant weakness in selling its bonds—the yield is now over 6 percent, which is an unsustainable level—it created a massive problem within Europe because Italy is a very large country, cannot be easily bailed out and, indeed, cannot be bailed out," Greenspan added.
I tend to agree; I saw more of the euro crisis in the stock market retreat than I did the debt crisis. I kind of assumed everyone else did as well until the S&P downgrade Friday named the GOP specifically. That will kind of muddy the waters a bit, which is unfortunate. Italy is a Top Ten world economy and it's teetering. It is a country that has never had a stable government in place and a population that looks to strong leaders and strong individuals. Facists and communists have all been very fashionable in their day and the political extremes there make our differences look petty. The concern with Greece isn't a fraction of what could go wrong with Italy.
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