With the world's third largest debt after the US and Japan at €1.9 trillion
(£1.18 trillion), it is big enough to bring the global financial system to
its knees. It is also in the front line of contagion as the Greek crisis
metastasizes.
Yields on 10-year Italian debt jumped 16 points to 5.86pc on Tuesday after
Italy's data agency said the country is sliding even into deeper recession,
with GDP shrinking 0.8pc in the first quarter.
Output is now 6pc below its peak in 2008. Italy has been trapped in
perma-slump for a decade, the only major state to suffer a fall in real per
capita income since 2000.
Rising anger has led to a spate of violent attacks by terrorist groups over
recent weeks, all too like the traumatic 'years of lead' in the late 1970s.
The government is mulling use of troops to protect targets after anarchists
shot the head of Ansaldo Nucleare last week and hurled petrol bombs at tax
offices.
