Rice County Republicans

PIIGS referes to Portugal, Italy (Ireland), Greece and Spain. These members of the European Union are examples we are becoming familiar with through recent events in the Eurozone.

The key fact about the Eurozone is that it represents a MONETARY – not a fiscal, ie government budget – union, whose policy is set by the European Central Bank or ECB. The main job of the ECB is to set interest rates for the entire Eurozone.

Ever since its inception, Eurozone members have been aware of a potential conflict between the fact that monetary policy is set by the ECB for the entire Euro-area, while government spending, ie fiscal, policy is managed by each country.

Ref: Economy Watch.

Think of California, their profligate spending which appears to have been set in concrete during the boom times (though the development of entitlement programs, which is a form of social concrete). Now, they are sinking under a sea of debt and promisory notes that we may find ourselves making good, in a situation similar to that of the PIIGS in Europe.

Our thanks to Stephen K for pointing this article out to us.