"In fairness, Lehman’s bust called everything into question; everyone wondered whether there were 10, 20 Lehmans out there. We sort of know how many Italys there are."
But that wasn't the only problem with Lehman. It also did real damage to otherwise healthy firms. Yes, we know how many Italys are out there now. But how many more will look like Italy a couple weeks from now?
I would say that we've already priced an Italian failure in... but then again that's another thing they said about Lehman.