Perhaps it was already too late for Italy to avoid the financial downgrade that credit-rating agency Moody's threatened at the beginning of this summer. It's not as if people didn't see it coming. Italy's economy has been battered by rising debt and worsening credit spreads. A default or bailout is every European central banker's nightmare scenario -- it's the economy "too big to save." Indeed, as Finance Minister Giulio Tremonti ominously warned in July, "If we don't act now, then we will be like the Titanic, and even the first-class passengers suffered." Not to push the analogy, but Italy may have just hit the iceberg. It's not necessarily sinking, though.
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