Italy Debt Impact on U.S. Economy

Italian financial crisis potentially more threatening than situation in Greece.
2:30 | 11/09/11

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Transcript for Italy Debt Impact on U.S. Economy
If you were watching your money today you felt the body blow the largest percentage drop in seven weeks. Down more than 3% it was a jolt to American 401 k.s and it was straight this time from Italy. Another country teetering on the edge of a financial abyss that gathering storm that threatens to dwarf the Havoc and Greece. Here's ABC sure enough -- it. It -- they had perfected it the dolce vita the good night. Italians forbidden from putting in more than 48 hours a week in titled to four weeks paid vacation although most get six weeks. A full six months of maternity leave. And workers retire with a full state pension at 56 -- after 35 years of work whichever comes first. The result Italy's economy hasn't grown they've borrowed too much out no -- thinks they can. Back so the party's over. The party is more than over it's been over for a long time and if they don't move soon they'll be nothing left a party where. The debt crisis in Greece was scary consider this -- the world's 32 largest economy Italy the seventh. Greece -- just 305 billion dollars in economic activity each year Italy two trillion too big for a bailout. So when Greece's economy should we -- tremors but if the food falls. Yeah. Italy's a third biggest bond market in the world so they they just can't be ignored so you can see why investors around the world are really on edge so. We expect here European investors will likely run to financial safe havens US banks. The extra cash here will drive interest rates lower but it will be extremely hard for anyone to get alone. With the world economy shaking banks won't want to take any risk. And expect Wall Street whip -- The stock market will likely have massive ups and downs as people hang on every word of the unfolding soap opera in Europe. Who will lead when will Berlusconi resign every small change there could set off market euphoria or collapse here. And we got a taste of that volatility today the average for a one K lost 4000 dollars today. -- if you have a 401K or your -- in the market close your eyes and hold not. We should expect a lot more sense -- 4000 dollars big -- Kurtz thanks so much.

This transcript has been automatically generated and may not be 100% accurate.

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