If Portugal, Ireland, Italy, Greece or Spain had retained their own currencies they’d have depreciated substantially, raising the competitiveness of their exports compared to the Northern European countries with sound fiscal policies and integrated trade for whom the Euro made more sense. Joining the Euro was a disastrous decision for Greece. They got under a decade of low borrowing costs and lost huge amounts of autonomy. Spain, Portugal and Italy lost access to their traditional means of dealing with the fact that they’ve grown too expensive to be competitive, devaluation, and they’re not politically capable of labour market reform so their levels of growth are probably permanently lower because they can’t give the whole country a pay cut every ten to twenty years by making imports more expensive, while boosting exports as well.
> The European debt crisis (often also referred to as the eurozone crisis or the European sovereign debt crisis) is a multi-year debt crisis that has been taking place in the European Union since the end of 2009. Several eurozone member states (Greece, Portugal, Ireland, Spain and Cyprus) were unable to repay or refinance their government debt or to bail out over-indebted banks under their national supervision without the assistance of third parties like other eurozone countries, the European Central Bank (ECB), or the International Monetary Fund (IMF).
Of the five only Ireland made a huge unforced error in guaranteeing the banks’ bonds. The other four borrowed money on favourable terms they likely thought they’d be able to pay back given continued economic growth (as did Ireland). They were wrong about the continued economic growth but they weren’t the only ones. Plenty of German banks agreed with them; that’s why they lent them the money. Not being able to reform labour markets in Southern Europe isn’t the mark of idiots. If the voters won’t stand for something it isn’t happening no matter how brilliant the politicians they elect.
More generally
https://en.wikipedia.org/wiki/European_debt_crisis
> The European debt crisis (often also referred to as the eurozone crisis or the European sovereign debt crisis) is a multi-year debt crisis that has been taking place in the European Union since the end of 2009. Several eurozone member states (Greece, Portugal, Ireland, Spain and Cyprus) were unable to repay or refinance their government debt or to bail out over-indebted banks under their national supervision without the assistance of third parties like other eurozone countries, the European Central Bank (ECB), or the International Monetary Fund (IMF).