Commentary: Greece provides a cautionary economic tale

Deficits matter.

Just ask the Europeans who've been forced to bail out spendthrift Greece to protect their own economies. Just ask Americans who are suddenly seeing the Euro-scare drag down the U.S. stock market.

Wednesday's 2-plus percent hit on U.S. stocks was largely driven by growing anxiety that Greece's flirtation with catastrophe could spill over into Portugal, Spain, Ireland and perhaps Italy — all countries threatened by a general erosion of confidence. The ripples could hurt banks and investors around the world who have a financial stake in those countries.

Serious, sustained damage seems less likely now that other European countries — after much grumbling by the fiscally prudent Germans — have agreed to offer Greece $144 billion in undeserved credit. Disaster was staring everyone in the face. Greece's credit rating had been cut to junk status; its bonds were turning toxic, and it was within three weeks of default.

The lesson for America, whose own national debt is rapidly increasing, is that government cannot run up the VISA bill forever. A binge of deficit spending is sometimes necessary in a dire crisis — World War II and the potentially catastrophic credit panic of late 2008 come to mind — but the binge can't become business as usual.

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