By Chris Redman, contributor

FORTUNE — The rot was exposed in May 2010 when recession-hit Greece came clean about its shaky finances and received a $159 billion bailout. Then came Ireland. The erstwhile Celtic Tiger received a $113 billion aid package in November 2010. Then, in April 2011, Portugal became the third country to request a rescue. That could cost as much as $114 billion. With rocketing yields on government bonds, Spain could be the next debt domino, joining Portugal, Ireland, and Greece, a triumvirate often referred to as euroland’s “PIGs.” Where is this going? There are roughly three scenarios for the 17-nation eurozone — good, bad, and extremely ugly.

The good scenario sees Spain decoupling from the PIGs by convincing markets that it has put its economic house in order. That would buy time and create calmer conditions for Europe to manage orderly debt restructuring for the PIGs where necessary. Markets are already betting Greece, whose sovereign debt will soon reach an unsustainable $500 billion, will be the first candidate. Spain’s first deputy prime minister, Alfredo Pérez Rubalcalba, says his country won’t be another domino but a “dam protecting the eurozone.” Let’s hope so. Unlike the PIGs, Spain is too big to bail out and remains highly vulnerable.

The bad scenario sees Spain failing to right itself. Slower growth driven by the global economic recession will make it difficult to meet deficit-reduction targets. Higher interest rates will hurt Spain’s banks, which must roll over debt equaling around 14% of gross domestic product in the next two years. Also, the eurozone recovery could stall because of rising oil prices and interest rates, and the debt crisis could rumble on — and into other countries like debt-laden Italy and Belgium. Coupled with growing public antipathy toward costly bailouts, this eventuality would make it more difficult to address restructuring, and things could get worse.

The ugly scenario starts with a disorderly debt default by the PIGs that sends a financial tsunami through the markets and banking system, creating havoc far beyond euroland borders. This outcome is why Washington has been urging the Europeans to take the sort of debt medicine it has so far failed to prescribe for itself. Moody’s recent downgrade of Irish sovereign debt to near junk level is a straw in a wind that could reach gale force.

Euro future Ironically, the euro itself is at the heart of euroland’s debt crisis. The PIGs could probably muddle through without any bailouts if they were able to devalue (as they regularly did in the past), but a common currency makes that impossible.

So how will they cope? Austerity (a kinder word for deflation) is the prescribed cure, but democracies are not good at staying that course. Civil disobedience is on the rise in Greece. So should the euro go? Economists argue that without fiscal unity, a common currency and one-size-fits-all monetary policy can never work.

But those who say that it’s a miracle the euro — and eurozone — has lasted this long should recall the words of EU founding father Walter Hallstein. “Anyone who does not believe in miracles in European affairs,” he observed, “is no realist.”