Portugal is far along the primrose path to economic bankruptcy, following in the steps of Greece and Ireland. While the Portuguese debt crisis is not nearly as acute as that of Greece and Ireland, it nonetheless serves as a warning to other European Union countries, as well as the United States, that profligate government spending has its price.
European Union states, especially Britain France and Germany are due to support an emergency bailout of Portugal to the tune of about $100 billion. While the Socialist government in Lisbon tried to stave off the bitter pill through a series of austerity plans, Prime Minister Jose Socrates' government finally collapsed.
Now new elections have been called for June. Yet Lisbon's looming cloud of debt has not disappeared, but become a foggy miasma on the River Tagus. No matter which party wins the elections, (hopefully it will be the market-oriented Social Democrats), the new parliament faces a deepening debt comprising 85 percent of GDP. (By comparison, U.S. debt is now slightly more than 100 percent of GDP!)