The End of The Affair

Chaos theorists suggest that a flap of a butterfly's wings in Brazil could set off a chain reaction that results in a tornado in Texas. The interdependent world of Italian finance works in much the same way. Early this month, the automaker Fiat — admittedly, a rather large butterfly — joined in a hostile bid for Montedison, a conglomerate whose far-flung holdings include Italy's largest private-sector electric company.

Such transactions would hardly seem to be the stuff of high drama. Yet that one move called into question the power of the élite investment...