@cnn i'm definately not wrong... the original PIGS included Italy and not Ireland... the newer abbreviation is now PIIGS which includes Ireland and Italy..

if you still aint convinced check it out on Wikipedia

@sage...true but the trend is catching up fast and spreading globally from Asia (Russia) to Europe (Iceland is refusing debt servitude) and did not spare Latin America including the Argentines in South America. Countries are facing national bankruptcies...mostly due to huge stocks of external debt.

'Argentina defaulted on part of its external debt at the beginning of 2002. Foreign investment fled the country, and capital flow towards Argentina ceased almost completely. Argentina was "left out of the world." The currency exchange rate (formerly a fixed 1-to-1 parity between the Argentine peso and the U.S. dollar) was floated, and the peso devalued quickly, producing massive inflation.

Large-scale debt restructuring was needed urgently, since the debt had become unpayable. However, the Argentine government met severe challenges trying to refinance its debt. Creditors (many of them private citizens in Spain, Italy, Germany, Japan and other countries, who had invested their savings and retirement pensions in debt bonds) denounced the default; the Italian government lobbied against Argentina in international forums. Vulture funds who had acquired sovereign bonds during the critical moments, at very low prices, asked to be repaid immediately.

The state had no spare money at the time, and the Central Bank's foreign currency reserves were almost depleted. (Moreover, whatever amount left was needed to control the availability of dollars in the local market, in order to prevent further devaluation of the peso.) For four years, Argentina was a pariah, effectively shut out of the international financial markets.

Even as the economic situation improved, the amount of the debt was still the largest defaulted debt in history (about 93,000 million USD), and Argentina was in no position to pay without sacrificing essential parts of its budget.

The Argentine government kept a firm stance, and finally got a deal by which 76% of the defaulted bonds were exchanged by others, of a much lower nominal value (25–35% of the original) and at longer terms...Debt bonds not exchanged in 2005 accounted for 23,381 million USD, of which 12,688 million were already overdue. Because of the lack of payment to these creditors, Argentina is the only member of the G-20 that is unable to raise capital in the international financial markets...

http://en.wikipedia.org/...tine_debt_restructuring

http://www.ft.com/cms/s/...b49a.html?nclick_check=1

@Intelligentsia, if it becomes a domino effect, the entire financial system will collapse. For a fact the US will no longer be able to service its debts.

@sparkly that becomes the major dilemma the eurozone is facing.. if greece gets bailed out then what stops the other of the PIIGS asking for one... but on the other hand if any country in the eurozone fails then we are talking about a failure and collapse of the euro currency...


under no circumstances will germany and france let this happen as these two countries had to dump their already strong currencies(mark and franc) for the euro...

but all this said i really dont see a crisis happening with portugal, spain or italy happening any time soon so the ECB can buy alot of time to set up a strategy...

Capitalism has not been disproved but not being allowed to work...