Portugal got through its latest bond auction, selling about $2 billion in long-term bonds, but fund managers and speculators today are almost gleeful in explaining how they will be able to put the screws to Portugal next time.
A European bailout, of course, will not help Portugal any more than it “helped” Greece and Ireland. The only way out for Portugal is to make sure that there isn’t a next time — that at their next bond auction, they surprise financial markets with how little they want to borrow.
The lesson from Portugal’s predicament, not just for the United States but also for individuals, is that it isn’t safe to be in debt for years at a time, without the resources to pay it all off on relatively short notice. If you put yourself in that situation, sooner or later, the financial powers will get you.