It was the summer doldrums and while millions of Italians were on their traditional vacations, the markets were launching a violent attack on the lira.
Fearing the collapse of Italy's currency, Premier Giuliano Amato reached into the bank accounts of every Italian, amassing a solidarity fund to shore up Italy's finances.
That was 1992, and Amato's "blood and tears" policy allowed him to introduce sweeping changes in the pension and health care systems — much like the markets are demanding today.
Often late, often last-minute, Italy prides itself on coming through when facing the abyss. Could it happen again? Or — after endless foot-dragging by Silvio Berlusconi's government — is it now too late?
The day after Berlusconi bowed to the markets with a promise to resign, traders attacked Italian government bonds Wednesday with renewed virulence, sending borrowing rates soaring to a level considered unsustainable.
There is clearly scant faith that Italy, this time around, has what it takes to save itself from economic collapse, possibly dragging Europe and the global economy down with it.
But since rising from its fascist debacle in World War II, Italy has faced terrifying times before and come through with its democracy intact and its finances bruised but not in ruins.
The nation can also rely on enviable prowess in sectors like automaking, fashion, and industrial tools. Along with globally-recognized giants like Fiat and Gucci, Italy boasts scores of world-class small- and mid-size firms, often family owned, that are admired for their high quality and export around the world.
Against those strengths, Italy has managed to snuff out fire after fire through a combination of frantic crisis management and sometimes surprising acceptance from its people.
In 1992, Amato took 6 lira for every 1,000 in Italian bank accounts. The people were shocked and outraged, but they swallowed the bitter pill with minimal disruption — recognizing that the future of the nation was at stake.
Facing another economic crisis in 1995, Premier Lamberto Dini pulled off a tough-minded pension reform while heading a government of non-political technocrats. Again, the move was unpopular, but Italians lived with it, and it ended up stabilizing the budget and crucially helped keep Italy within EU membership rules.
The emergency saves and shows of unity have not been confined to the economy.
In the 1970s and 1980s, extremists from both the right and left launched what has become known as the "years of lead" with terrorist acts that included the spectacular kidnapping and assassination of former Premier Aldo Moro.
Nothing hurt Italian pride more than the cover photo of a German newsmagazine showing a gun in a bowl of spaghetti at the height of the terrorism era. Italy overcame the crisis with a remarkable exhibition of political cohesion, with a Catholic party accepting support from what was then the largest Communist party in the West.
Whether it was the last-minute rebuilding of soccer stadiums when it hosted the 1990 World Cup or electricians still wiring the G-8 summit site in L'Aquila in 2009 as the leaders' planes touched down, Italy has shown it can get the job done — just in the nick of time.
But this is a crisis of a different order of magnitude, possibly the biggest of the postwar era.
With debts of around 1.9 trillion euros ($2.6 trillion), Italy is considered too big for Europe to bail out. Higher borrowing rates will make it more difficult and expensive for Italy to roll over its debts. It has over 300 billion euros ($412 billion) to raise in 2012 alone.
Critically, Italy has gotten out of the habit of pulling together during the turbulent Berlusconi era.
The media mogul has been a polarizing figure during his nearly two decades in power, alienating the center-left opposition so deeply that there's uncertainty about whether Italians will again be able to overcome their ideological divide.
And nobody knows who has the courage and vision to step in to turn Italy around, while convincing Italians that tough action is needed. A look at both Berlusconi's rightwing camp or among the notoriously divided left draws a blank.
One name that has been floated as a possible savior is the technocratic Mario Monti, who heads the prestigious Bocconi University in Milan, and won widespread praise during his tenure as EU competition commissioner.
But even a strongwilled economist such as Monti will find it near impossible to get the job done unless Italians once again find some common ground as they have done in previous crises, overcoming an ingrained tendency to put local loyalties above national ones.
"Italy has a lot of resources that we can count on. We just have to get our act together," said Roberto D'Alimonte, a political analyst and professor at Rome's LUISS University.
The bad things that Italy is world famous for — corruption, rule-flouting, bureaucratic red tape — all are true.
But the nation has another side.
This past week newspapers were filled with photos of young volunteers who rushed to clean up the mud from Genoa and the Cinque Terre are after flash floods wracked the area, causing more than a dozen deaths.
And then there is the Tuscan businessman who took out a full-age ad in Corriere della Sera last week exhorting his country to buy government bonds to give the country money to pay down its debt.
"Only the people can save Italy from the crisis," said Giuliano Melani.
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