Eurozone Debt now hinges on PIGS
It hardly sound like an enviable name – PIGS. Yet, this is the exact term creatively coined by some journalist which represents the 4 nations in Europe which currently faces the real possibility of financial collapse.
P – Portugal
I – Ireland
G – Greece
S – Spain
It is amazing how Portugal and Spain came to be liken to a financial weakling but years of accumulating debts, borrowings and poor financial controls brought it to the same state with Greece. Amongst the European Union now, leaders must be asking themselves what should be the collective next steps instead of just verbatim. The next step would really have to be some form of loans which could stabilise the financial markets of PIGS and thereby restoring some confidence back into the Eurozone as a result.
Yet, such plan is not easy to materialise. Greeze will need about USD$100 billion of loans while Portugal, Spain and Ireland would require USD$150 billion collectively. A whooping USD$250 billion of loans is not easy to come by, even for nations which could afford the loan. Any loans by fellow members of European Nations would be an absolute political suicide internally – Germany, the most capably country of providing a loan, would not be doing just that – Germans would be questioning why their hard earned money goes into servicing the debts of reckless and careless nations.
Currently, 1 U.S. dollar trades at 0.7344 Euros. At the rate the Eurozone reacts and provide any simplistic solution, the US Dollar would gain against the Euro and this trend is widely predicted by forex traders. The view now is for the US Dollar to soon trade below the 0.70 mark within the next 3 months if the Eurozone still cannot get the act together over PIGS.
The International Monetary Fund would probably be the knight in shining armour. And it is time for the EU to wake up and understand that using the Euro as a common currency is all political – it does not being more financial stability into the Eurozone and rather, embarrasses the entire group of member states.
These countries spend like there is no tomorrow. Hope they can learn from this incident, or else we have another economic crisis?
Not only Greece or the PIGS. The entire Eurozone needs to better regulate the finances of member countries.
Hi,
my comments: It is not easy time for Greece. The issue that occurs now is due to accumulation of debts past the few governments – this is not caused by the current government alone.
The mindset of PIGS government now needs to change fundamentally on how we can keep pace with development while paying off massive debts.
The bond issue by Greece, at 6 percent payout is going to be a burden to the greece people.
Regards,
FG
Greece has only 1 chance and 1 month left before the even local companies get blacklisted globally.
Any updates on Greece debt? I heard the government may soon step out of the Euro usage??