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Western EuropeSeptember 1 2011

The sorry and familiar story of Italy's debt crisis

Huge public debts, lacklustre political leadership, teetering on the edge of an abyss... For Italy in 2011, read Italy in 1992, or Italy in the mid 1970s. The country has failed to learn the lesson of past crises and will have to make some unpopular decisions if it is to break this cycle.
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The sorry and familiar story of Italy's debt crisis

Think of Italy and imagine the pastoral tranquillity of Tuscan olive groves and Piedmont’s vineyards, mandolins and boater-hatted gondola oarsmen, or the relaxed charms of Audrey Hepburn and Gregory Peck in the romantic comedy Roman Holiday.

In 2011 the country had a very different feel: frenzied, gut-wrenching and nightmarish for politicians, bankers, small savers and large institutional investors, as they rode the roller-coaster of Italian share prices and treasury bond yields. The right-wing coalition government led by media-mogul Silvio Berlusconi trembled. Just where, when and how would it end, many wondered. With almost €62bn of government debt redemption due in September 2011, far more than in any other month over the next year, this month may provide a pointer.

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