>> Italy might be cooking up a new Eurozone debt crisis. The main ingredient is a big extra dollop of government spending. At a time when the country is already stuffed with debt, diners can't decide if that's the right order.>>
> I believe the EU is just attacking Italy without really studying the budget.>> The cabinet meeting Monday and Tuesday to shake on plans for the increase. It could raise the deficit to 2.4% of GDP next year, a violation of EU rules, which say heavily indebted countries must reduce their deficits.
But Italy is run by a coalition of the Populist League and the anti-establishment Five Star parties, they may relish a fight. Reuters' Crispian Balmer in Rome says it leaves the EU with a headache.>> If they let this budget pass, then it might seem the EU rules really are worthless.
The market is looking to Brussels to enforce the rules, and if the commission ducks it, then the market reaction could be very negative.>> Back in 2010 it was Greek debt that worried the world. Italy's economy is ten times larger, with almost $2.7 trillion of debt, no one has the cash to bail it out.
The worries of seeing the Italian government bonds tank to multi-year lows in recent days. Some think the Euro's survival is at stake.>> If the Italian markets fall heavily, and don't forget that lots of foreign banks are heavily invested in Italy. Then this could have catastrophic fallout for the whole of the European economy, and probably even the world economy.
>> Now the question is who blinks first. If Italy's government doesn't change its recipe, some think these diners might one day soon again be paying in lira.