Time - Fate of world on Monti’s shoulders

"Can this man save Europe?", wonders Time magazine on its cover. In heading to Washington and New York in recent days as part of his efforts to straighten out his own country, "the most important man of Europe", as the US weekly calls the Italian leader, was seeking nothing less than to avoid the collapse of the eurozone – and even of the global economy -

Monti’s mission matters to everybody, from Wall Street financiers to Chinese factory workers. That’s because Italy’s problems have became the world's problems, and Monti must fix Italy to avoid another global financial crisis. [...] Though the debt crisis in Europe has been raging for over two years, Italy [whose debt exceeds 120% of its GDP] looms as the biggest threat to the embattled shared currency’s survival, because Italy paradoxically is both too big to fail and too big to save. [...] Yet if Italy tumbles into insolvency, it could set off a chain of events that unravels the monetary union and puts Europe’s even grander half-century long democratic integration experiment in peril.

Monti's success is just as crucial for the global economy. The consequences of a default of Italy – and, worse, the collapse of the euro – are almost unimaginable. Italy could spark a financial crisis even more destructive than the one tipped off by the 2008 Lehman Brothers bankruptcy. Shock waves would ripple through global financial markets to every corner of the world, sinking banks and economies along the way. A recession in Europe, home to hundreds of millions of rich consumers, could derail the U.S. recovery and dampen emerging markets. The fates of Mario Monti, Europe and the worldwide recovery have become inexorably entwined.

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