Should Italy leave the euro/default on gvt. debt?

At the end of 2008 Italy had a national debt of 1.66 trillion euros. Debt stood at 105.8% of GDP so GDP must have been 1.569 trillion - en passant this absolute amount is very difficult to find ; not even the bank of Italy will give an answer.

The middle estimate for the fall in GDP for 2009 is some 5.2%.

1.569 x 0.948 = 1.487 trillion as an estimate for the outcome for 2009. Gvt. debt was officially announced 4 days ago to be at 118% of GDP. My best guess is that the outcome for end 2009 will be some 125% of GDP as Italy has yet to learn to pay unemployment pay at anything approaching western European levels. By some accounts only 0,5% of GDP is spent on this item. The question one might ask at this point is: what happens to the fantastic ( to anglo-saxon minds) levels of taxation on labour ( INPS. INAIL. BOOT money for builders) which are paid by employers - which naturally depresseses the level of pay for the workers? When you're out of a job you can wait months before some ghastly triumvirate of local politicians, trades union representatives and local Confindustria deigns to hand out a pittance. Non permanent 'precarie? get nothing despite having paid in.

This excursus appart; let's assume I'm right about 125% ratio of debt to GDP by end 2009. If this is true, and patient investors ( or bond vigilantes if you prefer) are prepared to go on accepting yields of 3.9% on 10 year gvt. paper ( BOT's or whatever) then 125 x 0.039 = 4.875% of GDP is going to be spent on servicing the interest portion of the debt. Maastricht, what on earth was that? 3% + 60% max.......... The choice is stark; 10 years of wage restraint/flexibility and of course investment is required in order to bring productivity up to competititve levels or get out of the Euro/default. Once Italy is out then Greece, Portugal and probably Spain will go to. The Euro will rocket and poor old Germany will have to find some very rich Chinese indeed to buy their excellent cars and capital goods. On the other hand maybe the Germans/Dutch etc. can be persuaded to fund Italy and the others - at a price of course.