Back in February 2010, a clearly very sharp and articulate reader responded to a DollarCollapse.com article on Spain's coming sovereign debt problems with the following:

Dear John,

I like very much your site ... but about Greece, Spain and the Eurozone you obviously have a US bias. In my opinion, you are indeed missing four key aspects of the situation:

1. Greece is known for three decades to be 'the' failed EU enlargement. So what is going on there is as much a crisis of the Greek debt as much as an intrumentalisation of the situation by other Eurozone member states to put Greece once for all on the right tracks.

2. for three years, the Eurozone leaders have been desesperately trying to find a way to prevent the Euro-Dollar rate to rocket till 1,60, 1,70 or more. And thanks to the very amateurish GoldmanSachs/hedge funds bets against the Greek bonds and the Euro, they are served on a silver plate with a Euro-Dollar rate at 1,36. So don't expect the Eurozone leaders to hurry anything in order to get the Euro-Dollar rate back to 1,50. -)

3. despite the amazing propaganda machine around the Greek debt (snow storms on the East coast were the only recent things which were not put on the back of the 'Greek bond fear'), the Euro-Dollar is stable at 1,36. Guess what will happen when the 'Greek tragedy' will pass fashion as it starts to do? by the way, with only 70 000 demonstrators in the streets of Athens two days ago (a very small number by Greek standarts), it is now clear that Greek public opinion will accept the austerity measures. Too bad for one of the 'Greek tragedy' scenario: political instability. You may read http://www.leap2020.eu for more on that aspect.

4. Spain got into the Eurozone in a fair way (not like Greece) and its exposure to real estate wounds is nothing compared to US or UK. Meanwhile in the Eurozone the heavyweight, like Germany, is sound ... while in the US, it's the heavyweights (California, Florida, New York, Michigan, ...) which are in trouble; and in UK, everything is in trouble. So, the day Spain will be suck into such problems will be the exact same day UK and US will be as well. I make a bet that on that very day, nobody will care of Spain and the Euro 'problems' ... but everybody will run away from the Pound and the Dollar.

In conclusion, you are right to stick with your great website's name, 'Dollarcollapse' : what we are seeing right now is the early stage of a major currency war. And after a big offensive against the Euro, the Pound is already sinking, and the Dollar has not gained much ground. The counter-attack is coming, thanks to US economy : with no recovery in sight, a Eurozone not falling apart, and the Chinese unloading T-Bonds, .... well, the result will indeed be the coming 'Dollar Collapse' ...! -)

It's been a year, and the euro is still hanging in there. And Greece has indeed been replaced in the headlines by the Middle East and Japan. But below the fold, so to speak, the Eurozone's problems have been worsening. None of the PIIGS countries are solvent and each is edging closer to some form of default/debt restructuring/social meltdown. Meanwhile, the ability of the richer European countries to deal with future (and inevitable) crises is politically in doubt. Here's a survey of recent articles on the subject:

No One to Share Burden of Spectacular Irish Banking Cost
The Irish were only recently made painfully aware of financial black days when they were told they were in hock to the private debts of their banks. Last year a so-called Terrible Tuesday was followed by a Tectonic Thursday and other grim days when the public here learned they were to be held responsible for debts of over €46 billion. The bill for bailing out its delinquent banks already amounted to 28% of the annual output of the economy, or more than all the tax revenues the government raises in a year.

But that was before this Thursday's disclosure of stress-test results showed four Irish banks will need €24 billion more from Irish taxpayers. It was just another extraordinarily grim day. It was made clear that Irish taxpayers will be on their own in carrying the costs, while senior bond holders would be protected.

At €70 billion, the public cost of Ireland's banking implosion is spectacular. The bill now represents 45% of the economy's annual output. However, legacy loan losses across the system, including those from a handful of British and Danish-owned lenders, will rise to exceed €100 billion.

Irish Central Bank Governor Patrick Honohan says, for the size of the economy, the bust will be among the costliest in history. "This is quite a big crisis, as everyone knows," the governor said Thursday as the authorities also confirmed the effective nationalization of the entire banking system.

Irish Bow to Trichet on Bondholders as Rescue Hits $142 Billion
Ireland yielded to the European Central Bank to protect bondholders even as its bailout bill for the region's worst banking crisis moved to as much as 100 billion euros ($142 billion) after stress tests.

The ECB in Frankfurt was "solidly opposed" to imposing losses on investors in senior bank debt, Finance Minister Michael Noonan told broadcaster RTE today. The ECB agreed to provide "ongoing" funding for the banks, he said.

Ireland agreed yesterday to inject as much as 24 billion euros into four banks, while leaving bondholders untouched. The government already funneled 46.3 billion euros into the financial system and set up an agency that paid more than 30 billion euros to assume risky property loans. The total equates to about two-thirds the size of the Irish economy.

"The government's position is very clear: It doesn't want to take action on senior bondholders for the four banks that are going forward," said Matthew Elderfield, head of regulation at the central bank, said in an interview with Bloomberg Television. "It recognizes that, on balance, that if you want to have these viable banks able to return to the market that would hurt their capacity to do that."

Spain May Take Over CAM After Talks on Merger Falter

Ailing Spanish savings bank Caja de Ahorros del Mediterráneo began discussing its possible nationalization with the central bank on Thursday, after its merger with three small peers fell apart late Wednesday.

A spokesman said the Alicante-based savings bank, or caja, is presenting the Bank of Spain with a new business plan and an application for money from Spain's state-financed Fund for Orderly Bank Restructuring, also known as FROB. He declined to say how much money the bank, known as CAM, needed, but analysts calculate that it would be enough to give the FROB control of more than 50% of the bank.

The nationalization of CAM would be the first since the Spanish government, under pressure to shore up international confidence in the health of the country's banks, in February set new minimum capital requirements. It said it would take equity stakes in those institutions that weren't able to raise new money. The Bank of Spain estimated that 12 banks would have to raise a total of €15.15 billion ($21.4 billion).

The confidence-boosting exercise, however, fell flat, as many independent analyses said Spanish banks would need much more capital. Moody's Investors Service, for example, estimated that banks would need between €40 billion and €50 billion.

Fitch Slashes Portugal's Ratings To Verge Of Junk
Fitch Ratings on Friday slashed its credit ratings on Portugal to one notch above junk status after concluding that the embattled nation was less likely to seek external support in the near term after setting elections for June 5. Fitch said it viewed external support as "necessary to bolster the credibility of Portugal's fiscal consolidation and economic reform effort, as well as secure its financing position."

It warned that any delay in securing help from the European Union and the International Monetary Fund would increase risk to the country's economy and financial stability; Portugal's borrowing costs have surged to unsustainable levels after Prime Minister Jose Socrates tender his resignation last week following the rejection of his latest austerity package.

Socrates is now head of a caretaker government that will remain in power until a new government is sworn in. Portugal's President Anibal Cavaco Silva said the caretaker government has the power to request external help but the country's Finance Minister Fernando Teixeira dos Santos claims the government has lost legitimacy and therefore wouldn't be able to ask for or negotiate a bailout.

Merkel Faces Pressure on Euro, Taxes
German Chancellor Angela Merkel is coming under pressure to sharpen her party's conservative approach toward Europe, taxes and other issues after a devastating regional election defeat over the weekend.

Voters in the wealthy southern province of Baden-Württemberg on Sunday booted Ms. Merkel's Christian Democratic Union from office after almost 60 years of continuous rule. The stunning loss in a populous state has emboldened party members who have long argued she has strayed too far from conservative principles.

One obvious target for conservatives is the government's strategy for dealing with the euro-zone debt crisis. Many Christian Democrats have been disappointed that the chancellor's harsh rhetoric about runaway government spending in Greece and other weaker euro-zone countries hasn't been backed up by equally punitive policies. Ms. Merkel has sought to appease German voters with public calls for tough sanctions on countries that break deficit rules, but has endorsed generous aid packages demanded by her fellow euro-zone leaders.

And Greece, which did for a while drop from the headlines, is back:

Greek budget deficit likely higher than estimated: minister
Greece's budget deficit "very likely" closed above the official estimate of 9.4 percent in 2010, the finance minister said Wednesday amid signs the government's effort to boost tax revenue are failing.

"We started from a deficit of around 15.5 percent. The 2010 deficit we will find out from the statistics authority, I cannot give an estimate but it will very likely be higher than 9.5 percent," George Papaconstantinou told private Real FM radio, according to a transcript posted on the station's website.

Greek reports this week said the slippage was owing to additional pension fund deficits found by auditors from the European Union's statistics service Eurostat who have been in Athens since last week.

If those findings are confirmed, the 2010 deficit could exceed 10 percent of Gross Domestic Product, the reports said, despite draconian spending cutbacks that sparked waves of general strikes and protests last year. Greek long-term borrowing rates remain prohibitively high and the country's credit standing has been hit by successive downgrades from rating agencies, the latest on Tuesday from the Standard & Poor's.

Greek teachers, doctors on strike to protest planned spending cuts
State school teachers and hospital doctors in debt-ridden Greece have walked off the job to protest planned education and health spending cuts. Doctors in the social security fund system were also on strike for the second day Wednesday, demanding that their fixed-term contracts be made permanent. Health and education unions are planning demonstrations in central Athens later in the day, to protest planned school and hospital mergers.

Some thoughts:

Clearly, nothing has been fixed in the past year. Politicians have made some promises and attempted to keep them. But they've failed. After a round of big spending cuts, the PIIGS countries are still light years away from the Eurozone's 3% deficit target. Germany, meanwhile, has been leveraging itself via debt guarantees, with little to show for it. Voters across the continent seem to have lost their appetite for either new austerity measures or increased bailouts.

Going forward, will any PIIGS country electorate accept a radically diminished standard of living in order to allow big international banks to keep paying six and seven figure bonuses to their executives and traders? Will German voters accept higher taxes and slower growth just so the Portuguese, Irish and Greeks can avoid paying the bills they've run up? The intuitive answer to both is "hell no", and recent elections bear this out. So expect the plans now being cooked up by Eurocrats and their bankers to fall through in the coming year, and be replaced with "haircuts" on euro-denominated bonds, followed by big writedowns in bank earnings.

And that's if the process goes smoothly. The worst-case scenario of riots, falling governments and debt defaults would put Greece and the rest of Europe in the headlines for a long time to come.