Wednesday, March 23, 2011 4:50 PM

Ireland 10-Year Bond Spread Hits Record; Portugal's Government Collapsed; Portuguese 5-Year Yields Hit Record 8.2%; Death by 1000 Cuts

As expected, the Portuguese government collapsed today in the wake of a dispute between political parties regarding increased austerity measures.

Bloomberg reports Portuguese Parliament Rejects Government’s Deficit Plan http://www.bloomberg.com/news/2011-03-2 ... ilout.html

Portuguese lawmakers rejected Prime Minister Jose Socrates’s deficit-cutting plan, threatening to topple his government and increasing the chance of an international bailout.

Following parliament’s vote against proposed spending reductions and tax increases, Socrates was set to meet President Anibal Cavaco Silva at the presidential palace in Lisbon and then address the nation, heightening speculation he’ll call early elections.

The Social Democrats, the biggest opposition group in parliament, contested the new austerity measures. The party has still said it supports Portugal’s plan to reduce its budget gap and meet deficit targets.

“With bond yields stubbornly high and heavy debt redemptions due over the next few months, it appears all but inevitable that Portugal will be forced to follow Greece and Ireland in accepting financial support,â€