What the Greeks Are Teaching Despite the hysteria, the real story of the debt crisis is that the euro, finally, is working.

Had Ben Franklin been present at the Maastricht summit back in the 1990s, he might have told Europe's publics: "You've got a euro, if you can keep it."
The rather less quotable version this week from the European Central Bank is, "Please, God, don't let there be a 'credit event.'"
On one level, it seems absurd that the fate of Europe hangs on the decisions of Moody's and S&P. If Germany had prevailed in its demand that private creditors chip in for the latest Greek bailout, the rating agencies might have discerned a "credit event"—or default. Banks holding Greek debt might have been deemed in violation of their capital standards. Bank depositors might run. One country after another might be forced to close its banks and reopen them having dumped the euro in favor of restored local currencies.
That's the nightmare scenario. But step back. The larger message is that the euro, finally, is working.
Whether Greece gets debt relief now or later, the Greeks will not escape sweeping structural reform of their economy—one of the most corrupt, crony-ridden, patronage-ridden, inefficient, silly economies in Christendom. Its tax system operates on voluntarism and fine judgments about whether the bribe or the tax would be more burdensome to pay. The state railroad maintains a payroll four times larger than its ticket sales. When a military officer dies, his pension continues for his unwed daughter as long as she remains unwed. Various workers are allowed to retire with a full state pension at age 45.
Those who say if only Greece still had its own currency, so much pain would have been avoidable, exaggerate. Under no possible currency regime would Greece have been able to go on forever borrowing money from foreigners to live beyond its means or its willingness to work. The same is true to lesser degree of other troubled European economies, including Portugal and Spain.
All along, the challenge of the euro was the challenge that undid the gold standard—to make "the law of one price" prevail across multiple countries in the age of interest group democracy. "One price" in one country works—Americans will pick up and move 3,000 miles for a job, but even in America, not without pain.
Yet the nostalgia for a Europe of independent currencies is mostly nostalgia for an illusory shortcut—even more so as services, rather than tradable goods, become the overwhelming source of employment in modern economies. Greece, with its sun and history, has every potential to make a happy, privileged existence inside the euro zone. Today's growth gap between Europe's north and south, which some say proves the unwisdom of a common monetary policy, is hardly organic—it's the product of their common mistake in loading too much debt on unreformed southern economies in giddy expectation of euro-based prosperity.
If folly there was, it was in the way the euro was sold. British financial economist Roger Bootle, a longtime euroskeptic, reminds us that the single currency was an elitist endeavor from the start: "Where possible, electorates would be denied the chance to say whether they approved of the euro and other aspects of integration. Where they had to have their say, they would be compelled to go on voting until they said 'yes.'"
Voters were told the euro was a matter of being a good European (i.e., not a Nazi). They weren't told the purpose was to force competitiveness on their welfare states and labor markets. And this mis-selling is extended and compounded in today's conceit that sovereign borrowers, now that they've been allowed to pile up unsupportable debts, must never default.
Wrong. Under "one price," default is the natural, disciplined solution to bad decisions by borrowers and lenders alike
We are talking, remember, not about the value of debt going to zero, but trimmed back on negotiated terms, depending on country, by 30% or 50%. Creative alternatives, such as debt for equity swaps, are always possible.
The right place for Europe's first responders to focus is on the banks, while letting democratic governments decide what combination of default, austerity and muddling through is the right way to get their countries growing again. That's the way to keep the euro viable in the long run.
The wrong way—which many lean toward, sadly—is hurriedly to introduce a fiscal superstate to tax prosperous North Europeans to support slovenly habits in the south. Here's betting that, even at the risk of their betters calling them Nazis, prosperous North European voters would promptly go to the polls and blow up the European project altogether.