Forget PIGS, Europe’s problem is broken EEGs

November 21, 2011

By Peter Thal Larsen
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The euro zone needs a new acronym. For the past three years, PIGS has served as a catchall for the cash-strapped states on the single currency’s periphery. But now that the crisis has moved to the core, a change is overdue.

PIGS has proved surprisingly durable. When it was first coined, citizens of Portugal, Ireland, Greece and Spain were understandably upset at being lumped together in such a derogatory way. Yet as Ireland and Portugal followed Greece in seeking bailouts, their similarities outweighed historical differences.

Some felt the acronym was self-fulfilling, giving attention-deprived speculators a handy shortlist from which to select their next sovereign victim. However, its survival was also an accident. When Italy got into trouble earlier this year, it slotted smoothly into the slot previously reserved for bailed-out Ireland. Politically sensitive bodies avoided the zoomorphic insult by reshuffling the letters to create the GIPS.

Now that the crisis has hit the euro zone’s core, this approach will no longer do. But coming up with a new acronym poses several problems. First, there is the challenge of accommodating lots of extra letters: France, Belgium, Finland and the Netherlands are all feeling the strain. Second, apart from Austria, there’s a shortage of new vowels. That makes little Estonia – which only joined the single currency in January – an attractive candidate.

Even then, though, the task looks hopeless. Throw in Slovenia and Slovakia, and the best option is SPIFFINESS. This hardly sums up the gloomy mood. And it doesn’t include Greece, which is where all the trouble started.

A better idea might be to start with the one remaining euro zone member that isn’t under attack from the bond markets. Andrew Balls, head of European portfolio management at PIMCO, now describes the euro zone states being shunned by investors as EEGs: Everyone Except Germany.

It’s an accurate reflection of the panicked state of markets. And the acronym has the advantage of being short. In the euro zone farmyard, it’s time to forget about the PIGS and start counting the broken EEGs.

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