April 7th, 2011
06:15 AM GMT
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(CNN) – One by one, the PIG economies - first Greece, then Ireland, now Portugal - have gone to the EU and IMF trough to bail out their debt-ridden economies.

The European Monetary Union is desperate to make sure that the acronym of troubled economies doesn’t turn into PIGS. So far, Spain has been spared.

And EU finance officials hope the request Wednesday by the Portuguese government for a bailout will be a firewall that stops the debt contagion from spreading to Spain – a much larger economy, with greater significance to the world economy and the future of the euro.

“That’s the main question now in the European Union: How far can this get,” Pedro Santos Guerreiro, editor-in-chief of Portugal’s leading financial newspaper, Jornal de Negocios, told CNN. “And Spain is quite nervous today, more nervous than they were yesterday, because it shows that maybe they’ll be the next country.”

“Spain has dramatically cut (its) problems but still has a lot of unemployment,” he added. Spain’s unemployment is forecast by Madrid to hover just below 20% in 2011, according to government figures released Wednesday.

Mounting sovereign debt has become a top global concern in the wake of the financial crisis. European nations like the UK are moving toward greater austerity, and Japan’s natural and nuclear crises exacerbate its world-topping debt load. The budget debate in Washington and the possible U.S. government shutdown underscore the political divide over the huge pile of debt amassing in the world’s largest economy.

When Greece sank into debt woes in late 2009, there were real fears the 17-nation eurozone wouldn’t survive a spiraling crisis, as richer and growing economies like Germany and France were being forced to pick up the tab for debt-ridden smaller nations.

“The Eurozone has really had a big question mark on this new phenomena of a bailout system, and the European Union is quite skeptical, I think, not only towards Portugal but mainly in what ways this crisis is going to evolve,” Guerreiro said.

Eliminating the shared currency for a return to national currencies would offer greater flexibility for ailing economies to raise or lower the value of their currency, but the economic fallout from abandoning the euro is too great for European economic planners to contemplate.

“The euro must prevail – there is this feeling quite strongly in Europe,” Guerreiro said.

soundoff (22 Responses)
  1. Btangos

    USA ?

    April 7, 2011 at 7:29 am |
  2. GailD

    The super rich must stop hoarding, the banks must stop all the scams, governments must start being about and for ALL the people and the truth of our interconnectiveness must be spread for starters.

    April 7, 2011 at 9:17 am |
  3. Henk

    Who Cares. Ireland, Greece and Portugal together make up 5% of the EU population. And they make up less then 3% of the EU Economy. California alone makes up 12% of the US Population and about the same 12% of the US Economy. Yet 43 US states are in Enormous Financial Trouble. The Only reason Portugal can not afford it is because speculators are abusing the system because Europe does not Yet have One BOND market like in the US. Without a Single Bond Market weaker nations will get picked on beyond belief. It`s a sad joke carried out by rich abusive institutions who will bet against entire Nations if they can make a profit from it. Things will change if the EU starts changing these weaknesses step by step in the coming years.

    April 7, 2011 at 12:54 pm |
  4. Charlemagne

    The US and the UK should have been the "next" ones long ago if the financial sector was not completely corrupted & dominated by the anglosaxon good old boy club. Pathetic, Cnn's interest on sinking the Euro. Get a grip.

    April 7, 2011 at 12:55 pm |
  5. Eri

    how funny it is that western countries were bashing and puting down the post comunist countries and now looks who's asking for money eh.

    April 7, 2011 at 1:46 pm |
  6. HadEnough

    Mr. Voigt, why don't you call Mr. Maddoff a PIG, or Siemens (the highest purveyor of bribes in Greece), or for that matter yourself. You might think it is cute or funny to dismiss entire countries as PIGS but I bet you you wouldn't be too happy if someone used insults to describe the entire USA for the mess that this economy is in.

    April 7, 2011 at 3:49 pm |
  7. Carmen

    I'm spanish and i think that we'll be the next country... PIGS economies should be called GIPS economies...

    April 7, 2011 at 4:48 pm |
  8. Garibaldo

    I agreed with Henk we need a Eurobond you simple can't have a bunch of diferent economies and countries selling individual bonds while maintaning the same currency.

    The problem here is simple the so caled bailouts are nothing but forced mortages on the countries.
    The ideia of a bailout is has the name says to bail out ! Instead the European bailout forces countries to take recessionist measures that ensure a drop of the GDP.

    The correct problem is exactly that one !!!The countries have a debt too big for their GDP so you have 2 ways to solve it.

    One you force the countries to the European bailout at high interest rates and force them to pay it in hope that the markets will then accept to refinance those economies when all this ends, however has we have see not only it doesn't end but it keeps spreading.

    Or you can lend at interest 0% with the promise to remain outside the markets for the next 10 years and help those countries devolpe the economies so that even if they still have to pay high interest when the 10 years end they have big enough economies to handle it.

    Finally I would like to remind everybody of something if the EU has bought the whole Greece debt and lend it back at 0% interest the problem would have been solved there! It would only cost around 250 billion.
    Instead the EU keeps pushing the problem away hoping it will go away.

    Remember right now Portugal whole DEBT is 250 billion and they will need 80 billion to bailout Spain has alot of bussiness on Portugal meaning it will FALL and the bailout of Spain alone is 250 billion.

    So it would actually by cheaper on the long run to buy Portugal whole debt for the 250 billion and stop the spread there resulting in the country also having a bit grown. Or we could just lend the 70 billion to Portugal make it go to a recession and then have to pay those exact same 250 billion to Spain which total debt is too big to be bailout and could actually spread to belgium or god forgive us Italy. This would mean having 5 to 6 countries of the Eurozone stagnated for years while the rest of the world passes us.

    Think about it Portugal is the last small country that the EU can afford to do a full bailout instead of this joke the EU calls bailout.
    Oh and don't forget in 3 years for no when the bailout money runs out and the countries finish paying it their debts will be the same the only diference is that the size of their economies will by smaller in other words same problem poorer countries here we go again.

    April 7, 2011 at 4:55 pm |
  9. Tina N.

    CORRECTION: The EU acronym is ....P I I G S... and it stands for the countries of Portugal, Ireland, Italy, Greece and Spain.

    April 7, 2011 at 5:38 pm |
  10. Connie

    Tina...don't be so fast to put Italy on that list, or are you not taking into consideration the amount of refugees they've taken in from all of Africa? Someone has to feed those people...and I don't see France, Germany, or any other the other more powerful European countries helping foot the bill. I won't mention the Romanians...oh, sorry, couldn't help myself...

    April 10, 2011 at 10:45 am |
  11. Connie

    Personally, I hope Portugal goes back to the Escudo...I'm sure for a while they will try and match the value of the Euro, but when reality sets in, the value will be less than the Dollar...I'm tired of my flimsy dollar being chipped away by the Euro as I work for a US company, salary paid in Dollars, but pay my bills in Euros. Quite frankly, it's time to pull our troops back home, stop outsourcing our US jobs, and clean up our own back yard...

    April 10, 2011 at 10:50 am |
  12. Mario

    I think it is time to face the problem and not play poker with the future of Europe. The current status will take us nowhere, and people will not tolerate it forever. Either a sustainable solution is found, or these countries will quite simply go default and stop paying their debts at the outrageous interest rates they are being asked. Then everything will fall apart, and perhaps then the countries that now look at the PIGS in an altive manner will understand that this is also their problem and their future at stake. I praise the courage of the leaders of Iceland, which quite simply said enough of this crap.

    April 13, 2011 at 11:33 pm |
  13. gerald fisher

    I hate bailouts.Getting a good business model might help

    May 4, 2011 at 8:44 pm |
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