The European debt crisis has affected many countries within the content thereby putting financial strain on the citizens as well as their government. However, there are countries in Europe that are handling it better than others, while other countries decide to work together to be able to pull themselves out of the crisis. The PIGS which is an acronym for Portugal, Ireland, Greece and Spain are the countries that have been affected by the economic crisis due to their spending habits and that of their citizens. Initially these countries were considered to have the most stable economies in the European continent.
The banks in these countries are said to have lent out a lot of money in terms of bad credit loans that have placed a lot of financial strain on the central bank which is forced to provide financial assistance. These bad credit loans are usually provided in the form of unsecured loans which usually leave the lending institution in a dilemma when the expected repayments for the loan are not made. Most of the borrowers with a poor credit rating were also allowed to borrow further complicating the situation which was meant to ease the burden in PIGS.
However, there are countries that have managed to hang on during the European debt crisis which has enabled them to keep afloat for both the citizens and the government. These countries are referred to as STARS because of their ability to maintain their economic environments especially during a financial crisis. These countries have been quite aware of the damage that the providing of unsecured loans to borrowers with poor credit rating is able to affect the economy negatively as there will be more borrowing than repayments which means the banks will need to bailed out by the central bank.
