What’s happening with the PIGS (Portugal, Ireland, Greece, and Spain)?

In my last post, the BRIC economies and the CIVETS were defined. This post enumerates another group of countries, PIGS, and their economies. The PIGS are Portugal, Ireland, Greece, and Spain. About two weeks ago, Ireland requested a bailout of $113 billion from the International Monetary Fund (IMF) and the European Union (EU). Recently, Ireland received the bailout and their banks are getting some relief. Debt-strapped Ireland was forced to accept the bailout from both organizations, as the country is mired in an economic slump thanks to its ailing banks.

Next on the radar for countries which may need another bailout, are Portugal and Spain. Spain’s unemployment rate is 20% and joblessness has increased by almost 6% this year. The long-building construction and real estate bubble in the country has made Spain (the country with) the highest unemployment rate in the 27-member European Union. In addition, there is a widespread fear that Lisbon and Madrid are also in danger of defaulting that has led investors to dump those countries' bonds plus push up their borrowing costs in recent days. Spain’s Prime Minister Jose Luis Rodriguez Zapatero is trying to reassure financial markets by granting 426 Euros/month to people, who have exhausted their 24 month unemployment benefits. Zapatero has mentioned that the country does not need a bailout, but his tone has changed in the past week. Recently, Spain reported a flat GDP (gross domestic product) number in the third quarter which is in line with their past reports of low growth for the majority of 2010.

Finally, let’s discuss Greece. Greece had implemented a program of austerity in its economic system. The country was proceeding in the direction of bankruptcy. Greece announced painful new austerity measures worth 4.8 billion Euros ($6.5 billion) to deal with a financial crisis; which has hammered the euro and unsettled financial markets. This report is from March 2010. As of December 1, 2010, Greece received an extension until 2021 to repay its 110 billion euro ($145.7 billion U.S.) EU/IMF bailout loan. Policymakers hope the move will help stop fears the overborrowed country will restructure its debt after the three-year EU/IMF funding ends. This extension will give the Greeks more time to return their economy to stable growth, and to pay off this overpowering debt. In closing, the world economy is suffering from the ongoing problems in the PIGS economies. At this time, the U.S. may get involved in helping the eurozone economies with the various bailouts.