Despite the strength of its common currency, the European Monetary Union is beginning to look a bit wobbly.
Critics are quick to point to sovereign-debt weak spots in a number of member countries and even speculate about a dismantling of the Euro Zone.
The Greek deficit debacle, right on the heels of the ratings downgrades for Ireland last year as well as somewhat similar problems in Portugal and Spain have made the unflattering acronym, PIGS, common parlance in global economic circles, such as that of the World Economic Forum's annual meeting in Davos, Switzerland this week.
"There is talk [about Greece leaving the euro zone] and the markets are looking for it. They want to hear this bad news. The market is looking for negative news around the world at the moment," said Lauren Rosborough, senior currency strategist at Westpac Institutional Bank.
The acronym PIGS has been used in the markets to include either Italy, or Ireland, or sometimes both under the longer version PIIGS. But lately worries about Italy have subsided, because it is not seen as vulnerable as the other four.
The fact that Greece shocked the markets last year when it admitted its deficit figures were greatly exaggerated enhances the country's present—and future—problems.
"The problem with Greece is that they lied about their figures so nobody believes them anymore," Martin van Vliet, ING euro zone economist, told CNBC.com.
Now, with a government debt of around 113 percent of GDP in 2009 and forecast to rise to more than 120 percent this year, twice the EMU limit, Greece must cut public spending, fire public sector workers amid a 10-percent unemployment rate and reduce funding for hospitals and the military.
"I think it is a very important story and not so much for what it says about Greece but because it shines such an unflattering light on the whole EMU project," said Nick Carn, global investment strategist at Odey Asset Management. "There's been a lot of myth-making about EMU right from the outset. I don't think any European country really met all the EMU requirements when they formed the thing."
Greece, however, is not alone, and the spotlight is likely to move from country to country as new signs of weakness appear in the group of 16 countries now sharing a single currency.
It is considered the worst because its government is not seen as being able to pull through. In a Moody's score card of European countries' sovereign risk, Greece got a low mark for "government effectiveness" – just 0.56.
The composite index values the effectiveness of governments on a scale from – 2.50 to + 2.50; a higher value means greater maturity and responsiveness of public institutions.
Spain was given a score of 0.99, Portugal 1.05 and Ireland 1.61. Denmark got the highest mark, 2.19 (The lowest, -1.1, by the way, was given to Belarus.)
In the euro zone the story is divergence, van Vliet said. "The most dangerous countries are those with high government debt and external debt—high current account deficits," van Vliet said.
Unthinkable Gains Currency
According to one school of thought, Greece's problem is simple: it is the single currency. Were the country of 11 million people able to devalue its way out of the crisis, it would not have to cut so deep into public spending, according to Carn.
Not so fast and not so easy, say experts.
First off, from a legal standpoint, it is not clear whether a country can leave the euro zone without giving up being a part of the broader European Union altogether, forfeiting an array of benefits such as agricultural subsidies, tariff-free exports and free movement of goods, services and people among the member nations.
There are also economic and fiscal ramifications.
"I don't think it's that easy [for a country to exit the euro zone]. All its debt is denominated in euro; if it exits, there would be a sharp devaluation of the country's currency," Ansgar Belke, professor of macroeconomics at the University of Duisburg-Essen, told CNBC.com.
If one member were on the brink of disaster, the European Union will have to help, precisely to stop the spotlight from moving around and showing its less flattering parts, shattering the bloc's hopes for an economic recovery.
The EU is not allowed to bail out individual countries, but "this can be done bilaterally," for instance, if Germany were to help Greece and sets out certain conditions in exchange for the money, says Belke.
A more solid economic recovery would also help, but that's unlikely, especially through export-driven growth, a staple of the past. The World Bank recently estimated that Euro Zone GDP will grow just 1.0 percent in 2010 and 1.7 percent in 2011.
Of course, a shock to one of the PIGS may benefit the others, as well as the stronger EMU members, by triggering a solid decline in the euro.
"There is a silver lining to the Greek drama," says van Vliet. "But it does not offset the local issues facing countries like Greece and Spain."