Despite electoral changes, European nations can’t avoid the consequences of debt

Popular dissatisfaction with government austerity, and the sacrifices it imposes, has brought down the governments of the Netherlands, France and Greece. But struggle as they may, opponents of bitter fiscal medicine are likely to face financial market disapproval so costly that they will be forced to yield with only token gestures to appease public opinion.

These governments are in the grip of debt.

Forced to borrow to pay for their activities and services, the ultimate arbiter of how much they can have to spend is the bond market.

And when the bond market turns negative about a nation’s ability to pay, bond-holders call the tune.

That has already happened to Greece, and could happen to Spain, Italy and Portugal.

As Greece has discovered, its partners in the European Union are not willing to pay its bills. The withdrawal of perks many Greeks had come to count upon led to violent street demonstrations and, on May 6, voters recorded their unhappiness by voting for radical right-wing and left-wing parties.

The vote for the nativist Golden Dawn party jumped from less than 1 percent in the last election to nearly 7 percent, giving it seats in parliament for the first time. The party uses the Nazi stiff-arm salute and has a modified swastika as its emblem.

Slightly more than twice as many Greeks voted for the left-wing Syriza party, whose leader Alexis Tsipras has been given a chance to form a government. He claims the election results rejecting the coalition that agreed to “barbaric” bailout terms “has clearly nullified the loan agreement and pledges sent to Europe and the IMF.” He has pledged to renegotiate them if he gains power, even if it risks Greece being forced to withdraw from Europe’s monetary union. However, keeping the euro is still widely popular in Greece.

The largest number of seats — still far short of a parliamentary majority — went to the conservative New Democratic party, which backed the austerity plan. Its leader, Antonis Samaras, has already tried and failed to form a government. If no coalition emerges from the scattered election results, Greece will vote again in the near future and Greeks will have to choose between their support for the euro and their anger at austerity.

The Dutch will decide in September elections whether to stick with an austere budget or loosen the purse strings. The comparatively stable government of Holland on Monday collapsed over disagreements regarding budget cuts needed to meet EU limits.

France’s new president Francois Hollande would appear to have the freer hand in raising government spending as he has pledged to do. But even France must weigh the risks of higher interest rates and limits on growth if the bond market lowers its credit rating. Once it gets you in its grip, the bond market is relentless.

The lesson for the debt-burdened U.S. government ought to be clear.