You can only stretch a rubber-band  so much. At some point, it will give away and the point can be painful. The same applies to economies which run huge deficits and have to keep financing them by external debt. The debts are mostly perpetual – the old debt is refinanced by new and this can continue – so long as the gap between income and expenditure is under control (deficit of 3% is a good number according to EU norms). However, if you are running a deficit more than 4 times the norm – you will find yourselves… More >>