Spain, Portugal, Greece and Ireland don't have much room to adjust. The remedies to their out-of-control spending make it harder for them to pay their bills. As they are downgraded, their debt becomes more expensive, and none of these countries have the productive capability to work their way out of debt. As they start on their second bail-outs, the question remains -- when will they be able to stabilize and start the recovery process? I don't see any way they can become competitive and grow their way back, because they have depended on government spending just to struggle along to this point. How will they go from dependence on government deficit spending to private sector wealth creation with the time frame in which they are working? It could take decades for these countries to transition to an economic system which is amenable to private sector wealth creation. Default appears to be the only way out, so all the money being thrown at the problem right now is probably wasted.
I just hope that this "crisis" doesn't grow to the point where the international power elites quicken plans to enforce a new-order solution. We could be in for some amazing transitions in the next year or so. Maybe China will offer to buy the PIGS and teach them how to get things done?