Guess who is going to need a bailout right after Spain? The Italian economy is the 8th largest economy on the entire planet and right now it is being absolutely overwhelmed by a tsunami of debt. In an attempt to address this problem, Italy is going down the exact same path that Greece, Portugal and Spain have gone. And so far, we are seeing the exact same results that we have seen in those other countries. Austerity causes economic growth to slow down, and that causes unemployment to soar. When unemployment rises, tax revenues go down and you end up missing your original deficit reduction targets so you have to implement even more austerity measures. It is a vicious cycle that we have seen play out again and again in Greece over the past five years. But unlike Greece, Italy is way too large to be completely bailed out. The truth is that there are only 7 economies on the entire globe that are larger than the Italian economy. Plus, keep in mind that the 12th largest economy in the world, Spain, is also on the verge of formally requesting a bailout. (Read More....)
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