That's when the 10-Year Italian Government Bond Yield was trading at 6%; I got a lot of derisive hate-mail for saying that (in July 2011).

OK so my timing was off. I said it would hit 4% by July 2012; in fact it took all the way up to now to get there.

Of course predicting how quickly it takes a penny to drop is a shot in the dark, like trying to predict how long it will take a drunken chimpanzee to hit the target. But eventually, as always, the market figures it out.

Finally the penny did drop and Italy, despite all the alarmist press, is not a basket case; my points then (nearly two years ago):

1. Total Italian debt burden (private plus public) is 250% of GDP (compared with over 350% in USA).
2. Granted the public debt is 120% of GDP, but over 50% of that is owed to Italians living in Italy; hardly a flight-risk.
3. Net external liabilities are 15% of GDP compared with more than 100% for Portugal and Greece.
4. The country makes things, it has tourism and it has opera, and food and football, and guys who live with their mom until they get married, and until recently its trade deficit was negligible (goods + services). Right now that's about 2% of GDP mainly due to having to buy oil on the spot market to replace oil traditionally supplied by Libya. By comparison, USA's trade deficit is about 3.5% of GDP (last four quarters).
5. Berlusconi may look like a pig and eat like one too, but Finance Minister Giulio Tremonti is tough as nails and he steered Italy through the recent financial turmoil with distinction.

Nothing much changed, the euro did not collapse…it won't.

Get used to it.