New additional austerity “push” and huge increase of taxes for 2013 proposed by IMF and the European Union, would eventually bring Portugal to the brink of a “new Greece” phenomena within the Euro Zone.
The increase of taxes beyond a certain level has always a bad effect on the economy — see Laffer’s theory —, but in a time of a debt crisis, one may understand it as reasonable.
However, the Portuguese problem is that due to the high value level of the Euro, the Portuguese export trade has a severe problem of competition, on one hand, and in the other hand, the rate of fresh investments in the country is basically null.
We have, then, a high increase of taxes, destruction of companies and employment, and an objective impossibility of economical regeneration.
In this context, and in case the “push” from IMF and European Union goes on causing an endless recessive economic spiral, I foresee:
1/ a militarized putsch that will suspend the Portuguese democracy and the participation in the Euro Zone;
2/ reintroduction of a local Portuguese currency, stating that the public debt would be transformed and paid in the new currency ;
3/ political rapprochement of Portugal to Russia and consequent estrangement from NATO (including the Azores American military bases).