Shorter Mitt: Arrivederci, Italia!

In last night’s “debate,” Mitt Romney was asked what he’d do about Italy’s debt were they to default (and by extension, Spain, Portugal, Greece, and France as well).  His answer? Same one he gave to the auto industry.  Let them eat cake.According to the man many believe to be the sanest and most rational candidate (other than Jon Huntsman), he would let Europe hang.

“There’s going to be an effort to try and draw us in,” Romney said. “Europe is able to help Europe. We have to focus on getting our own economy in order.”

Let me remind Mr. Romney of something one of America’s founding statesmen is reported to have said, having inked his name to a rather famous document,

We must, indeed, all hang together, or assuredly we shall all hang separately.

Nowhere will this become more apparent than in a pan-European default.  As former IMF chief economist Simon Johnson points out, any default will not be confined to the defaulting nation or, presumably, to the European continent.  The contagion will be global and the devastation incalculable.

According to the September 2011 edition of the Fiscal Monitor of the International Monetary Fund, 44.4 percent of Italian general government debt is held by nonresidents, i.e., presumably foreigners (see Statistical Table 9), on Page 72). The equivalent number for Greece is 57.4 percent, while for Portugal it is 60.5 percent.

And if you want to get really negative and think the problems could spread from Italy to France, keep in mind that 62.5 percent of French government debt is held by nonresidents. If Europe has a serious meltdown of sovereign debt values, there is no way that the problems will be confined just to that continent.

None of the rest of the GOP field fared any better on the question of Italian default, but the fact that the party-blessed candidate could get it so wrong should be deeply troubling to everyone.

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