All opposition parties united to defeat Prime Minister Jose Socrates' latest austerity measures in a parliamentary vote Wednesday, saying the belt-tightening went too far.
The lead-off member of the PIIGS problem children is about to leap headfirst into a sovereign bond default and/or EU bailout because its fractious politicians can't come to grips with the need for austerity. The euro may still have some life left in it if the EU has credit it's willing to extend. Maybe this is why Germany is cutting back on support for nuclear power and military support to Libya's rebels; it needs whatever cash it can scrape together to keep Europe financially afloat.
Full disclosure: No position in Portugal's sovereign debt.