Will Recession in Italy Spread to Rest of Europe And Crash the Global Economy?

It is widely reported that Italy is currently stuck in an economic recession and there is a growing risk of a financial crisis emerging from there. Being on austerity drive also means their government cannot spend their way out of the economic slump. The country's debt to GDP has reached an astounding 130%. We may be staring at a repeat of the Greek financial crisis soon. The only difference is that as Italy economy is so many times bigger than that of Greece (around 10 times) and any banking collapse is going to be contagious and spread to the rest of Europe. From there, it may lead to a worldwide financial crisis.

Looks like I have to make some changes to my portfolio while keeping a close watch on the latest development. However, I will still be keeping most of my assets in income generating stocks but re-look into my other assets to prepare to raise cash on hand for further equity investment should there be a downturn. I believe that a lot of countries in Europe, China, and the US are taking up too much debt. It takes only a slight change in consumer and business sentiment that will spark off the collapse of the domino.