A brief bond market rally following the announcement of another bailout for Ireland begins to fade.

Kevin D. Williamson writes about the Irish bailout and the reckoning to come.

Robert J. Samuelson has some thoughts on the European situation.

Paul Krugman looks at how the Euro now holds Spain as its prisoner.

Michael Barone takes a look at the fiscal problems facing the states here at home, and says we should pass a law allowing them to go bankrupt. I think this will happen, since the only way to get out of the mess they are in is to allow them to rip up their public employee contracts and renege on their pension obligations.

Martin Feldstein has some ideas on how we can cut the federal deficit.

What do all of these stories have in common? Each represents a tale of hubris, in this case by public officials in European capitols, Washington, DC and our state capitols. We have seen similar hubristic behavior lead to the downfall of private businesses (Enron, Lehman Brothers). Of course, governments will not simply disappear (unless we have revolutions, wars, or civil wars). But they will eventually run out of options, as they require money from the private economy in order to function, and they can only get that through taxation or via borrowing, which means the bond markets.

My predictions? I expect the Irish people will repudiate their current leaders at the polls. It will not make any difference, of course, since the new government will still need to tax and borrow, but they may decide to get out of the Euro, or default on their debt. Portugal is next, followed by Spain and Italy. The German people will repudiate any government that keeps bailing these folks out, so I expect either the collapse of the Eurozone entirely, or a significant shrinking of the zone.