The Ghost of Christmas Future

In Lisbon, Socrates quaffs the hemlock:

Portuguese Prime Minister Jose Socrates submitted his resignation Wednesday after parliament rejected his minority Socialist government's latest austerity measures.

The rejection "had taken away from the government all conditions to govern," Socrates said in a televised statement. He said his government would remain in power in a caretaker capacity.

The parliament's rejection of austerity measures—as well as Socrates' resignation—comes just a day before a European summit.

Socrates has said rejection of the austerity plan would force the debt-laden country to follow Greece and Ireland and seek an international bailout, which he opposes.

There's a lot in those few paragraphs, but I thought the key thing was the quote from Socrates. Portugal, like Greece and Ireland, is effectively bankrupt. They have no way to pay the debts they owe, many of them structural because of benefits promised to a bloated government sector. Socrates is a socialist, so if he's pushing austerity, it's safe to assume the situation is dire.

The problem is that the government workers are the ones who are making it impossible to govern:

Large protests have been held against austerity on the past two weekends and on Wednesday train drivers went on strike to demand higher wages, creating traffic chaos around Lisbon as commuters were forced to take their cars to work.

If this sort of thing sounds familiar, it should. We saw similar protests in Greece last year and what's been happening in Madison has similar roots. We saw calls in Wisconsin for a general strike when the budget repair bill was passed, so it would be foolish to imagine that we are immune from this sort of behavior. And are we on the same path as Portugal? Well. . .

The United States is on a fiscal path towards insolvency and policymakers are at a "tipping point," a Federal Reserve official said on Tuesday.

"If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when," Dallas Federal Reserve Bank President Richard Fisher said in a question and answer session after delivering a speech at the University of Frankfurt. "The short-term negotiations are very important, I look at this as a tipping point."

But he added he was confident in the Americans' ability to take the right decisions and said the country would avoid insolvency.

"I think we are at the beginning of the process and it's going to be very painful," he added.

As Scott Walker can attest.