Greece and other PIGS

The problem of Greece is really a classical financial crisis. Boom times and cheap money from abroad have encouraged uncontrolled lending in the economy. And of course the other side of foreign capital inflows is a huge budget deficit, which will make it difficult to adopt a Keynesian tax and spend approach to getting out of the crisis. Nor can Greece do much of a monetary solution to its problems, being part of the Euro zone. Budget cuts, higher interest rates, greater unemployment seem inevitable, if politically unacceptable, and of course a political reaction might lead them out of the Euro zone altogether putting in jeopardy the whole European expansion project, as the contagion passes to other PIGS (Portugal, Italy, G. and Spain). Whereto then i wonder? Of course the markets are already forecasting these changes, shorting the euro, jacking up long term interest rates and credit spreads, with the sad effect of making inevitable the very crisis that they predict.