Europe’s alarming example

Warnings, when relentlessly repeated, tend to draw diminishing notice. Thus, alarms sounded about Europe’s ongoing debt mess, due to their near-monotonous familiarity, rank low on many Americans’ worry lists. Yet the steady worsening of that continental financial crisis — and its global consequences — rate serious concern in our nation.

According to the Federal Reserve’s quarterly survey of American banks and foreign banks with American ties, Europe’s deteriorating debt situation contributed to a tightening of credit in the United States over the second half of 2011.

Europe’s persisting inability to right its listing fiscal ship is also a cautionary tale for Americans. The U.S. government, as of this week, is on course for a budget deficit in excess of $1 trillion for the fourth straight year. Before that sorry streak began, our highest deficit had been $455 billion.

So don’t ignore the latest chapter in the scary story of the EU’s balance-sheet debacle. Don’t assume, either, that Monday’s agreement in principle by 25 EU nations to undertake fiscal reforms will reverse the downward course.

Britain and the Czech Republic were the only EU members that chose not to join Monday’s accord in Brussels. The deal, which would strengthen fiscal ties, reduce government spending and create a permanent bailout fund for Greece and several other euro zone nations that are awash in red ink, will be signed after the specifics are ironed out. The devil, as usual, lies in those details.

Germany, which has been carrying the biggest share of the bailout load over the last two years of stopgap measures, last week floated the idea of a European “budget commissioner” who could impose the major belt-tightening that Greece and other financially irresponsible nations need — and that their governments have failed to implement.

On Monday, German officials backed away from that extreme idea — the usurpation of national sovereignty. But that doesn’t alter the validity of this prediction, offered to The Wall Street Journal last weekend by German Finance Minister Wolfgang Schauble: “Unless Greece implements the necessary decisions and doesn’t just announce them ... there’s no amount of money that can solve the problem.”

Still, the EU appears ready to throw more money — reportedly in the $170 billion range — at the Greek problem with a second bailout. Greek and International Monetary Fund officials Wednesday predicted that the debt deal will be concluded in a “matter of days.”

Meanwhile, high unemployment across much of Europe is raising the stakes in a debate of necessary austerity vs. government stimulus spending.

Americans need to realize that, like it or not, Europe’s money troubles are our troubles, too.

We also need to learn from Europe’s fiscally unsustainable example.