New Doubts Over Italy’s Finances

Another day, another euro-zone country on the brink of disaster. Italian officials expressed concern Monday that the $125 billion Spanish bailout would not be enough to stop the crisis from spreading—and that Italy could not support such a huge burden. Italy, the euro zone’s third-largest economy, does not have enough economic growth to generate the bailout money itself, so the government will most likely be forced to borrow it—at high interest rates. On Monday Italy’s main stock index was the worst performer in Europe, as Prime Minister Mario Monti warned over the weekend that there is “risk of contagion.” Meanwhile, European officials and bankers said Tuesday that the government of Cyprus is reportedly considering a bailout—encouraged by the large Spanish bailout.