It ought to be noted that Marcell Lippi took the blame for Italy's humiliating demise—something that a clown like Domenech would never even think of. His penitence was somewhat forehanded as he managed to smack the players who lacked courage and played with terror in their hearts, while accepting the blame for picking such players. There were quite a few weak-kneed players on Italy's team yesterday, but none more so than De Rossi whose legs seemed to have been replaced with wet spaghetti. Four years ago, Italians played with gumption and guts and Gattuso the enforcer and not at all defensively. In the epic game against the host Germany, Lippi opted for more attacking in the overtime and they promptly won. Canavarro had a perfect game and a perfect World Cup. That was back then. Lippi picked a lot of old ones and some new ones, whom he expected to play like the old ones—but the guts, gumption and Gattuso were in short suply.
Though Michael Young’s analysis of Italian midfield problems makes a lot of sense, I do not think that Italian clubs’ relying on foreigners is one of the reasons. All of the players on Italian 2010 team came from Seria A, while many clubs have lively academies. Inter Milan, for example, has soccer schools which it uses as recruiting centers, not only in Italy, but all over Eastern Europe too. Furthermore, I don't think that Italian clubs are relying on foreigners any more now than they were four years ago.
What has changed in Italian soccer is that Juventus is no longer the powerhouse it used to be, thanks to that old shark Moggi and his wheeling and dealing. In May of 2006, too late to affect the Italian confidence, the match fixing scandal involving Moggi and Juventus was uncovered and by the beginning of the next season Juventus was relegated and Inter was champion (and they have been ever since). At the beginning of the millennium, under Lippi, Juventus dominated Italian soccer—Juventus fans sang songs about him and chanted his name. It could well be that the club needed Moggi's string pulling only to get ahead of Milan, who had Berslusconi, the supreme string puller, behind it. For they were a powerhouse of European soccer—in 2003 the Champions League finals, horrid though it may have been, featured Juventus and Milan. The spine of Lippi's Juventus included Buffon, Zambrotta, Canavarro, Del Piero, who were the spine of the Italian 2010 team. In other words, the heart of the champions was transplanted from Juventus. They had the confidence of the players used to winning, even if the winning with Juventus was helped by Moggi. The weakness of Juventus and the dominance of Inter has hurt Italian soccer.
On an unrelated note: I missed parts of the game between Brazil and Portugal today but cannot escape the impression that Ronaldo has not passed a single ball to his teammates today, while being quick to shoot from 40 meters out, just in case Brazil somehow fell on their knees and started praying while Ronaldo had the ball in his feet.