There have been so many terms tossed around in Europe that may sound Greek to you (sorry), or at least arcane and distant. But more often than not, they turn out to be profoundly important – not just for the global economy, but for the U.S., and for your wallet.

Here’s the one that’s clobbering markets today: ”ITALIAN BOND YIELDS”.

Surely, you might think, we don’t have to care about those – whatever they are?

Well…sorry…yes, we do.

Basically – those bond yields tell us what it costs Italy to raise money, to pay its debts. Today those numbers are skyrocketing – making it harder for Italy to do so. And every uptick in the bond ratings sends Italy closer to default.

Now you might say, O.K., then, I’m sorry for the Italians, I like Italy, but…why does this matter outside Italy?

Remember how markets went south – when it looked like Greece might default on its debt? Well, Italy’s debt is FIVE TIMES greater than what Greece owes. It’s been a messy process (and it isn’t over) as the Eurozone economies have struggled to bail out Greece. It’s hard — almost impossible — to see how the rest of Europe could (or would) muster the political will and actual cash to bail out Italy.

Right, got it, and really, I feel badly for Italy. But why does this matter for us?

Here’s a simple equation to keep in mind: Default + no bailout = Economic collapse. And here are some facts: Italy is the world’s 7 th-largest economy; while Greece makes up 2% of the European Union’s GPD, Italy makes up 17%.  As one of my colleagues put it today, an economy that size will not collapse in an orderly way.

O.K., you say, I get it it. Italy needs to be saved. It’s too big to fail, you might say. So how to stop the collapse?

Political unity would help. Global investors would probably respond well to some sense of coming together in this moment of crisis – some evidence that they were making critical and politically painful decisions. But look at Italy right now. It’s in the midst of political upheaval (see Berlusconi’s agonistes). We (and the markets) see no signs of a willingness to make those tough decisions.

 Sorry to bring you down.