The EuroZone (now) seventeen countries sharing the common currency was created by the Maastricht Treaty in 1999. When Greece joined The Zone, in 2003, the interest rates on its debt dropped by roughly 50%. Did the markets believe that the debt would be repaid by The Currency–or The Zone–rather than Greeks? Perhaps the Greeks thought so.
The problems with Greece’s Insurmountable Debt, as well as the weaker countries in The Zone, has been going on since February of 2010–without any solutions. Currently, however, the real concern is with Spain. Greece is a small economy; however, Spain is the third largest economy in The Zone–after Germany and France. So, it’s current banking crisis weighs much more heavily on Europe, as well as the rest of the World.
Some years back, Spain had a budget surplus and a reasonably well-balanced economy. THEN…the Real Estate Bubble burst in Spain. Spain’s banks failed to balance their loan portfolios among different industries. But, they didn’t use historical rules of financial common sense in making loans and, perhaps, without looking for the capability of borrowers to repay the debt. Those are NO-NOs!
Remember, also, that Italy, Portugal and Ireland are not out of the woods yet. And, as we saw in the Great Recession of 2008–remember that the finger was being pointed at one US bank after another–the debt concerns might just shift from one EuroZone Country to another. That is uncertainty.