The government of Portugal has collapsed

Prime Minister Jose Socrates resigned after the parliament rejected a slate of austerity measures he was promoting to rein in the country's budget deficit and debt.

Portugal's borrowing costs were already astronomical, and as soon as markets opened in Europe Thursday, the yields on its government bonds rose to a new euro-era record. That makes it almost certain, barring something unforeseen, that the country will have to seek a European Union bailout like Greece and Ireland did last year.

The political chaos in Lisbon also sheds some light on why the euro crisis hasn't been resolved. Investors don't believe that politicians of the troubled countries will have the political will to implement the drastic reforms necessary to reverse the deterioration of their national finances, or that their citizens will be willing to accept such pain if they try.

ORIGINAL SOURCE