Italian Prime Minister Silvio Berlusconi attends the meeting at the Prefecture Palace on August 25, 2011 in Milan, Italy. (Jacopo Raule/Getty Images)Jacopo Raule/Getty Images
The focus of euro-fear has shifted across the Ionian Sea to Italy. Unlike Greece, Italy is in no imminent danger of being unable to pay interest on its loans. But if its debt keeps accumulating at its current rate, in a few years Italy could be an enormously worse problem than Greece, because of the size of its economy – the eighth biggest in the world. A rescue package would have to be proportionately large.
Italy is a country of polar opposites. A striking illustration is to be found in North American social-science scholarship. The laudatory phrase "social capital" has been propagated in great measure because of a book published in 1993 about Bologna and other Italian cities: Making Democracy Work: Civic Traditions in Modern Italy, by Robert Putnam and two colleagues – well before Professor Putnam's more famous book on a similar theme about the United States, Bowling Alone. By contrast, a book of 1958 called The Moral Basis of a Backward Society, by Edward Banfield, described southern Italian village life as "amoral familism" – a world of selfish nuclear families and no public-spiritedness.
The strengthening of the civic-minded side of Italian society – not least in ending the tolerance of tax evasion – would be, in the medium to long term, more important than a few budget cycles of austerity, or than the prospective purging of the buffoonish Prime Minister, Silvio Berlusconi. Italians themselves are prudent savers (though their remarkably low level of household debt may have been assisted by their propensity not to pay much tax) and are fully capable of seeing the advantages of public economic prudence.
Italy is only partly "the periphery" of Europe. It is one of the original six members of what is now called the European Union. Its commercial and financial experience – mainly in Lombardy and Tuscany – goes back almost a millennium. The part-truth of the periphery theory is mostly to be found in the former Kingdom of Naples (which included Sicily), which, like much of Greece, resembled parts of the Third World only a few decades ago.
The ups and down of Italian bond yields matter, but in the long run it matters more that the Italians summon up the resolve to develop political and economic governance that will match their already developed economy.