Larry Kudlow

Panic has gripped stock markets worldwide over the Greek debt crisis and the threat of a debt-deflation contagion through banks in Europe (primarily) and the U.S. that own the bonds of Greece, Portugal, Spain and so forth. If these bond asset prices collapse totally, lending facilities would be badly crimped for both the short and long term. And that, in turn, would damage prospects for economic recovery.

The Dow closed yesterday off nearly 350 points. Earlier in the day, the Dow was down 850 points, though there is talk of computer glitches and technical problems that may have temporarily undermined trading. Either way, the market is getting creamed as a result of the Greek story.

Michelle Malkin

The real winner yesterday? Gold. It's up about $25, to $1,200. People want real money. They do not trust the debt-laden currencies of Europe and the United States. Or, for that matter, Japan. Gold is fast becoming, once again, a reserve currency of choice.

Meanwhile, the European Union/International Monetary Fund bailout package for Greece, which does include draconian budget cuts, contains a 2 percentage point increase in the value-added tax that is anti-growth. Steve Forbes correctly said Wednesday night on CNBC that the Greeks should be slashing spending and should move to a flat tax, just like the countries in Eastern Europe. I gave him a Nobel Prize for that.

Market chatter, at least in Europe, is suggesting that the $150 billion bailout is not enough. But it may be that the left-wing union mobs in Athens have caused a major backlash throughout Europe and elsewhere. Despite the mob, the Greek parliament was able to pass legislative approval of the bailout package. This caused a small stock rally for a brief time yesterday morning.

The German parliament will vote today on this package. Should it be voted down, all hell will break loose again in world stock and credit markets.

And then there's Britain. The Tories may win a close election and dethrone Labor. But if so, David Cameron and Co. will be a minority government.

I still believe that one of today's key themes is a global revulsion toward the massive spending and debt programs put in place by the U.S., Euroland, the G20 and the IMF back in late 2008 and 2009. Unwinding these Keynesian mistakes is not an easy thing to do. But financial markets are now exerting discipline on this out-of-control spending and borrowing.

Larry Kudlow

Lawrence Kudlow is host of CNBC’s “The Kudlow Report,” which airs nightly from 7 p.m. to 8 p.m.