Now that Greece has been kicked down the road, it's time for the other PIIGS countries to start lining up for similar deals. Portugal looks to be next, after its most recent deficit report:

Portugal's 1Q Budget Deficit Higher Than Expected

LISBON (Dow Jones) - Portugal's budget deficit for the first quarter of the year came in higher than suggested by the previous government, forcing the new one to step up efforts to control the country's accounts.

Portugal's statistics agency said the deficit for the first quarter was at 8.7% of gross domestic product. Although it was an improvement from 9.2% of GDP in the fourth quarter, it is still much higher than the 5.9% Portugal must reach by the end of the year under a EUR78 billion bailout program.

"This needs to be corrected fast," a government official familiar with the matter said.

Two government officials told Dow Jones Newswires Tuesday that the new administration will accelerate some measures to address the budget gap, including on tax increases. Prime Minister Pedro Passos Coelho is expected to announce the measures in parliament Thursday.

Under terms of the bailout agreed with the European Union, the International Monetary Fund and the European Central Bank last month, Portugal must cut its budget deficit to 3% of GDP by 2013.

The goal is challenging, particularly because the country faces a recession over the next two years.

Nonetheless, Passos Coelho, who took over the post of prime minister last week, has been quick to show how willing his government is to fulfill all the requirements imposed by the troika under deadline.

Portugal's bailout success will be key to the euro zone, which is currently struggling to shake off problems in bailed-out Greece.

Like Portugal, Greece was told to cuts its budget deficit sharply in exchange for financial aid. So far it hasn't been able to meet the targets.

Portugal, a country of nearly 11 million, is Western Europe's poorest, with growth that has trailed its neighbors over the past decade, something economists blame on an uncompetitive and rigid labor market. The unemployment rate has risen above 12% this year.

Some thoughts:

• Lately, whenever a new government takes power in a European country (or a US state for that matter) they discover that their predecessors have been cooking the books. This shouldn't come as a surprise, since an incumbent would have to be suicidally honest to run for reelection on the true numbers.

• It is a bit ironic though. Didn't the previous government get tossed out because voters didn't like its austerity plan?

• "Under terms of the bailout agreed with the European Union, the International Monetary Fund and the European Central Bank last month, Portugal must cut its budget deficit to 3% of GDP by 2013." Hmm. Slicing 6% of GDP out of government spending in two years -- while the ECB is raising short term interest rates, the global economy is barely growing, and domestic unemployment is already 12% -- doesn't seem politically possible. So some sort of extend-and-pretend deal is therefore coming. The question is whether it happens preemptively or in response to street riots and soaring yields on Portuguese bonds.

• The question then becomes whether the current German government has the political capital left to sell its voters on another big increase in their collective liabilities. Greece could be explained away as a one-time problem of a singularly badly-run country. But when several more failed states line up for the same deal, a pattern will form in the minds of voters.

• Meanwhile, the drawn-out euro crisis is giving reporters time to educate themselves, leading to a general realization that these bailouts are all about the banks, and that PIIGS country citizens are being turned into surfs so bankers and their shareholders can keep living like aristocrats. The next stage in the education process will be the discovery of parallels between today's global banks and the French Revolution.