As Italian Drama Persists, Fears of Credit Crunch Spread to Small BusinessesThe Atlantic Ocean is wide, but maybe not wide enough. On Thursday, markets had a mixed reaction to the deepening economic crisis in Europe. With Silvio Berlusconi's exit as Italy's prime minister, the nation is expected to name a new government within days. Some sources reported that the European Central Bank would step in and buy Italian bonds, easing fears that yields of more than 7% would cause the European economy to fracture.

In the U.S., small business owners grew nervous, while the equities markets took a slight hit. The crisis impacted oil prices, which fell on Europe's political news but were buoyed by reports of weak U.S. supplies. Gold prices fell nearly 2% to just above $1,750 an ounce, as the sell-off included precious metals. The wider commodities markets took a hit as well, with holiday treats like chocolate and sugar both trading down.

"The European economic crisis is definitely concerning as we're in a global market," said Danielle Snyder, the co-founder of DANNIJO, a New York-based designer jewelry and accessories company, and a member of the HuffPost Small Business Board of Directors. "The crisis has weakened confidence in spending abroad. Fashion in particular is an international business and Italy is one of the most influential countries in the game," said Snyder, who adds that her company has grown its European presence in the past 18 months.
"The crisis is a big threat -- don't mistake the damage this can do," says Clint Greenleaf, the founder and CEO of Greenleaf Book Group, an Austin-based independent publishing company, and another member of the HuffPost Small Business Board of Directors. "A hiccup in Europe can create havoc here, so it causes great concern. As with any crisis, there is both threat an opportunity – right now, we should all protect ourselves in case the storm is strong.

Even though they won't push the U.S. into another recession, Europe's problems will tighten U.S. lending and spending for the near term, said Alan Levenson, chief economist for T. Rowe Price. That could lead to a decline in asset values and wealth for American consumers and rise in savings rates. Translation: Slow growth through the end of the year and into early 2012. That won't help the growing U.S. deficit, already troubled by one credit downgrade this year.

Wednesday's global market sell-off was prompted after Italian 10-year bond yields broke the 7% level that had already sent Greece, Portugal and Ireland to the hand-out line. But Italy could be cushioned by its diverse labor pool and strong export sector, which give it a stronger ability to recover than its fellow European debtors. For all of Europe, however, Italy's problems accelerate a recession that is already under way, said Levenson.

The question now many are asking is: Is Italy too big too fail, making all this just another round of economic brinksmanship with Italy basically giving the economic equivalent of a crude hand gesture to the global market, said Joseph S. Fichera CEO of New York-based investment firm Saber Partners, LLC. "Italy has the ability to pay, but not the willingness," he said.

--Rod Kurtz contributed reporting to this article.

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jockmassage26

why is it every other day is a DIFFERENT story about europe crisis.. one day business are worried.. thats today monday.. but last friday the market was up almost 400 points because europe crisis was taken care of and U.S. business were rebounding but just slower than the govt wants? WTF!!!! the economy DOES NOT Change day to day.. and i'll bet if the MORONS in the SEC and other govt agencies did there work.. they'd find that BIG BUSINESS institutions create this bullshit stories and then sell THEIR stock when the markets surge.. as regular people buy back into the market at higher prices.. check it out..

November 14 2011 at 12:15 PM Report abuse rate up rate down Reply
savemycountry911

someoneole and evan like the protestors who put the American flag on the ground and crap on it. They should move to Cuba.

November 11 2011 at 10:59 PM Report abuse -1 rate up rate down Reply
1 reply to savemycountry911's comment
daballofire

They should be forced to move to N. Korea

November 12 2011 at 5:17 PM Report abuse rate up rate down Reply
kportguy1

Ignore the Tea Party and keep spending, we have a few more years to go before we're Greece, we can worry then.

November 11 2011 at 5:30 PM Report abuse +5 rate up rate down Reply
1 reply to kportguy1's comment
daballofire

Greece, with their paultry debt, is in way better shape than America will be at the end of the Messiah's term in 2012 We went from70% to 100% of debt to GDP in the last 2 years of the Messiah's reign and we will be over 120% of GDP at the next election - worse than Greece is now.

November 12 2011 at 5:20 PM Report abuse +1 rate up rate down Reply
someoneole

Restore the middle class, support OWS

November 11 2011 at 2:55 PM Report abuse rate up rate down Reply
someoneole

Where are the Tea Baggers today?

November 11 2011 at 2:52 PM Report abuse rate up rate down Reply
jwmgrand

We are near the 3 year mark of the republican devastation that George Bush did to the Banking industry, mortgage, and securities industry along with massive tax cuts for billionaires ......... President Obama has tried to patch this massive black hole that has created record insolvency in the Banks for the last 3 years ... some figure that Bush let 4 TRILLION in banking assets and homes get washed away. and you hear this other de-regulator ( Romney ) say he would take off regulations, ...why so we can have another repeat of the same greedy behavior in which the middle class bails out the billionaires on their dime once again . or will we have more polluted Land, water and air ..just so a few can get rich ! One thing is for sure , once the ( takeaways ) start and I am talking about Social Security, Workmans Compensation, long term disability, Fair Labor laws, there will be no going back to ( Fair Business Practices ) it will be open your mouth claim your rights .... instant termination ! so be carefull about the words( deregulate businesses ) it may cost you your job and your health ! Laws are made to protect workers , and no amount of FAST $$$$$ or New Jobs should ever supersede the Laws that men and women died for to protect their families from shady employers !

November 11 2011 at 11:30 AM Report abuse +7 rate up rate down Reply
twin

Hello

November 11 2011 at 10:46 AM Report abuse rate up rate down Reply
Taina

The PIGS can't pay. Two local governments file bankruptcy. At least 5 states are broke but there is nooo problem.

November 11 2011 at 10:36 AM Report abuse +3 rate up rate down Reply
jerachrome

When are European leaders going to read the writing on the wall? To borrow a winning campaign slogan from former US President Clinton, "It's all about energy independence, stupid." The countries in the deepest trouble are the ones that are most energy poor because they have spurned nuclear power. Greece has one measly 5-MW research reactor. Italy closed down all of its nuclear reactors in 1990. Spain committed to solar power instead of nuclear energy. Portugal committed to wind turbines instead of nuclear energy. Ireland has no nuclear power plants. All of these countries are teetering on the brink of financial disaster, and that is no coincidence. In contrast, France is almost 80 percent nuclear, and it is an energy exporting state. France sells electricity to Italy, Germany, and London. France has the second largest economy in Continental Europe, and is financially strong, and that is no coincidence. There is enough thorium to fuel nuclear power plants for the next 100,000 years, ending the world's energy and related economic worries for the foreseeable future. By the way, the USA is only 20 percent nuclear, and it has serious financial worries, and that is no coincidence. For those who are terrified of nuclear energy, consider how it must have been when man first discovered fire. The naysayers grunted, "Stay away from fire. It will turn the planet into an uninhabitable cinder." Both then and now, the benefits far, far outweigh the risks. Without a commitment to nuclear power, the eurozone will soon collapse under the weight of its energy needs.

November 11 2011 at 9:08 AM Report abuse rate up rate down Reply
jrb359

Let's see, early retirement, lifetime benefits and their going bankrupt? What a surprise! How much longer until it hits here?

November 11 2011 at 8:59 AM Report abuse +2 rate up rate down Reply
1 reply to jrb359's comment
ecdurant

They're, a contraction of THEY ARE, going bankrupt, not "THEIR going bankrupt."

November 11 2011 at 9:07 AM Report abuse rate up rate down Reply
1 reply to ecdurant's comment
jrb359

Thanks. I stand corrected.

November 11 2011 at 11:38 AM Report abuse rate up rate down