Martin Lee @ Sg
Sharing is Caring!

PIIGS Threatens Stability of Eurozone

PIIGS – Portugal, Italy, Ireland, Greece and Spain are currently the five weakest of the Eurozone countries.

euroTheir huge deficits has lead the financial markets to increasingly believe in recent days that one of them might default on its sovereign debt.

Their recently downgraded credit ratings not only makes it more expensive for them to borrow money, and also harder to find lenders.

Devaluation of currency is not an option unless they want to consider leaving the Eurozone. To prevent this from happening, some of the stronger countries might have to step in to bail out the weaker ones. This is provided (of course) that the stronger countries are not in trouble themselves.

Ultimately, governments will find that they cannot spend more then they earn forever. The biggest challenge is knowing when a crisis will erupt as such situations can run for longer than expected.

Dubai was quickly written off as a non-event. How will PIIGS play out?

Leave a Comment:

Notify me of followup comments via e-mail. You can also subscribe without commenting.

1 comment
Daniel P says 9 years ago

Dubai had Abu Dhabi stepping in, question is which rich European country is prepared to step in ? It is all a question of perception.

Reply
Add Your Reply

Notify me of followup comments via e-mail. You can also subscribe without commenting.