Why Read: Because now that Spain's economic woes are close to the center of world economic attention you need to focus on Italy - while still keeping Greece, Portugal, Spain and the Netherlands squarely on your ever more crowded radar screen.

Featured Article: A May 15 article focuses on Italy's current debt levels and debt yields, reporting on:

Moody's downgrade of 26 Italian banks on Monday evening, May 14;
an increase in Italian bond yields to 5.86% on May 15 following a declaration by Italy's 'data agency' that Italy's GDP shrank 0.8% in Q1 2012;
Italy being the only 'major state' to have fallen in real per capita income since 2000; and,
a former Italian Premier saying that Italy, along with France and Spain, risks 'instant contagion' if Greece leaves the Eurozone, apparently saying "The whole house of cards will come down".

Commentary: Having suggested some months ago, when Spain seemed to be off most media radar screens when it seemed it should be on them all, it now seems Italy is moving ever closer to joining Greece and Spain as an important 'center of attention'. Consider that France may be several months behind, but given its recent non-austerity government mandate, is nonetheless 'in the theatre', perhaps edging toward 'the wings' and might yet tip-toe toward center stage.

Supplementary to the foregoing;

Italy's economy measured by nominal (inflation included) GDP is reported as having been in the order of U.S.$2.2 trillion in 2011, making Italy the eighth largest economy in the world, the fourth largest economy in Europe - after Germany (U.S.$3.6 trillion), France (U.S.$2.8 trillion) and the United Kingdom (U.S.$2.4 trillion), and the third largest economy in the Eurozone (after Germany and France);
Italy's inflation rate was last reported in March at 3.3%; and,
Italy's reported unemployment rate last reported in March was 9.8%. Italy's youth (ages 15 - 24) unemployment rate currently is reported to be about 36%. Contrast this with Spain's current comparative reported unemployment rates of about 24% and 51% respectively. The Italian reported unemployment rates are up from one year ago by approximately 1.5% and 6% respectively.

Clearly, increased focus should be directed to Italy going forward. Simply put, Spain may well prove to be 'too big to fail', at least for the time being. If that is true, it has to be even more the case with Italy. If concern is being voiced with respect to possible contagion issues related to Greece, imagine the escalated extent of contagion concern if Spain's and Italy's economies continue to deteriorate.

Importantly, watch for escalated discussion and concern over real and nominal GDP growth generally, and country specific real and nominal GDP growth. Simply put, without real GDP growth economic trends in the developed and developing countries are virtually certain not to be positive.

That said, pay careful attention to media and other data on Italy going forward as you think about and plan your financial affairs. Italy is definitely something to discuss with your investment advisor(s), and most astute financial friends.

Ian R. Campbell, FCA, FCBV, is a recognized Canadian business valuation authority who shares his perspective about the economy, mining and the oil & gas industry on each trading day. Ian is also the founder of Stock Research Portal, which provides stock market data, analysis and research on over 1,600 Mining and Oil & Gas Companies listed on the Toronto and Venture Exchanges. Ian can be contacted at icampbell@srddi.com

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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