The news from Portugal: something good.

The Portuguese people have a checkered history. Used as cannon fodder by the Roman Empire, they became the Vandals and migrated from the Eastern edges of the Empire all the way to the Iberian peninsula. Then they became one of the staunchest Catholic people in Europe, inheritors of the culture of Rome. In fact, the Portuguese became noted sailors and colonizers. Brazil is to Portugal like Canada and Australia are to England: colonial descendants.

Today, Portugal struggles with the legacy of Social Democracy. Its national debt is 124% of the GDP and if it were not for the restraining force of the EU(the German influence), Portugal would be bankrupt. The country is headed by PM Pedro Passos Coelho of the Liberal Conservative Social Democrats. The real Socialist Party (the PS) is in opposition. It is no surprise that the current government is wishy-washy and accepts austerity as something forced on it.

In the midst of all this, the government has won a confidence vote and has instituted budget cuts via pension and pay cuts. These cuts are up for review by the Country's Constitutional Court and if the Court overturns the cuts, chaos will ensue.

It is against this background that Portugal held a bond auction. Five year bond yield ended at 4.891% and 10 year interest rates fell to 5.98% after being in double digits before the bailout. Is Portugal out of the woods? Hardly. This year is the third in recession  and unemployment hovers near 17%. It is a good start though.