in the euro zone you have strong economies (germany) and weak ones (the PIGS) Under normal circumstances a weak economy can devalue its currency make its export more attractive an imports more costly,helping its economy out. It can also print as much money as it wants to pay its own debts subject to the inflation that causes.
Enter the Euro.
suddenly the weaker countries are thought of as being as credit worthy as the stong ones. this allows greece,italy etc to sell a lot of bonds at low interest rates since the currency is the strong Euro.
now the market decides that these weak countries have sold enough debt and they dont want to buy any more at low rates. Under the old system the country would just devalue its currency,making any old debts cheaper. But with the Euro they cant just print more money. so they are stuck.. That in a nutshell is the problem.
Whats needed is one of 2 things. either the Euro prints more money or countries leave the Euro. Ideally it would be #1 but Germany,which controls the Euro wont allow it to happen. I suspect that in the next year the euro will fall apart. Contries will leave and germany /france and a few others will be the only ones left.
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