Italy is a giant version of Portugal while being in many ways the polar opposite of Spain. Italy has low private debt and massive public debt. Massive, in the sense that Italy has the third-largest bond market in the world. Let’s think about that for a moment. A southern European country with the world’s twenty-third-largest population and eleventh-largest economy has the world’s third-largest bond market. How did that happen? Look only at Northern Italy, and you see one of the most developed industrial countries in the world, with competitive exports, price-inelastic products, and high incomes. Include the south of Italy, and you see a rather different world of agricultural producers and small, low-productivity firms.

Mark Blyth, Austerity, loc. 195