The Italian Economy is the third largest economy of Europe and now becoming an epicenter of the turmoil in the Europe.

Following are the key points why Italy is on the brink :

• The Outstanding government debt of Italy stands at 129% of the GDP. It has the third largest soverign debt in world around $ 2.23 Trillion after Japan and the US. The Government debt of the economy has always been in the same range since 2000. But besides the government debt the overall debt of the economy has increased from 252% of the GDP to 310% of the GDP since Italy has joined the Euro. The corporate debt increased from 96% to 128% of the GDP between 2000 and 2010 according to the BIS. Personal debt also rose from 30% to 53% of the GDP between 2000 and 2010.

• The Italian 10 year bond currently quoting at 6.62% rose from 5.6% in a month's duration. The European Central Bank has been buying Italian and Spanish bonds since last few months as the yields surge to new euro era highs, but further buying by the ECB seems difficult looking at the current situation. Higher yields also signal a market fear of default and reluctance to lend. The higher lending costs also build up a vicious circle where it's hard to repay as the new borrowing is done on higher costs to fulfill the older ones.

• The spread of the Italian 10 year bond as compared to the German 10 year bonds is at 461 basis points the highest spread since the advent of the Euro.

• The Italian economy has also been through a bad period since it joined the Euro since 1999. After strong GDP growth in 1945-1990 the last two decades average growth of the economy has been below the eruo-zone average growth rate. The average growth rate between 2000-2010 has been a meager 0.6%. The slow growth rate will not help Italy in clearing the debt burden.