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