HERE COME THE P.I.G.S.!

About a month ago, I discussed the P.I.G.S. (Portugal, Ireland, Greece, and Spain) of the European Union, and the financial risk they posed for the E.U. At that time, it looked like Greece would be the first P.I.G.S. economy to tank, and it has. The E.U. "requires" that its members hold no more than 3% of its GDP in debt. Greece now acknowledges debt of nearly 13%, which means that it probably is more like 17%.
The dilemma for the rest of the E.U. is what to do about it. Officially, the E.U. charter doesn't permit a bail-out. And officially, Greece isn't asking for one. . That doesn't mean there won't be one, but it is no sure thing. Yesterday, the US stock market was buoyed by the prospect, and today, as the bail-out became less certain, the market was down, but only slightly as of this writing.
The Euro has been sliding against the dollar for about 7 months. It remains to be seen what effect this will have in the currency market, whether or not there is a bail-out. Generally, the Euro is seen as the "anti-dollar". If the Euro weakens further, this will continue to strengthen the dollar and bring money into the U.S. bond market as investors seek refuge.
All this will be up to France and Germany to decide. The U.K. has never adopted the Euro, in part because of the viral nature of currency problems. Another reason is that when countries like the U.S. get in debt trouble, they can print more money and inflate their way out. This is not an option for any country using the Euro. And they can't print gold.
Of course the rest of the P.I.G.S. are still in trouble.