Business Insider
October 21, 2011
With everyone going crazy about all the eurozone rumors circulating right now, it's easy to lose track of what's important.
So let's bring this back into perspective.
A little background:
- Since joining the euro back in 1999, the governments of Greece and Portugal (among other offenders) have gotten used to spending a LOT of money. When times were good, it wasn't a problem — banks and other investors were willing to lend them money on the cheap and their public sectors became bloated.
- When the financial crisis hit, however, problems came to a head. Debt levels in Portugal, Italy, and Greece became unsustainable, and taxes in a contracting economy are no longer enough to pay the bills.
- Greece, Portugal, and Ireland are still struggling to bring their public debt under control, after receiving billions of euros in bailout aid from the European Commission, the International Monetary Fund, and the European Central Bank (the so-called troika). Some of this aid was provided through a temporary Special Purpose Vehicle called the European Financial Stability Facility (EFSF).
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