NEW YORK – Why should 330 million Europeans face a financial and likely political meltdown for the sake of 11 million profligate Greeks? They should not.

Kick Greece out of the Euro. That’s the simple, brutal solution to the current financial crisis that is threatening to tear apart the European Union and provoke a global financial crisis.

As the old New York expression goes, “first loss, best loss.” Meaning, the longer one delays taking a loss, the worse it gets.

Greece, let’s recall, wriggled into the 17-member Euro zone by faking its accounts and falsifying economic and tax figures. So, it seems, did Italy. The EU closed its eyes to these frauds because of a desire to unite all of Europe.

Three other nations, Romania, Bulgaria and Cyprus, were also admitted to the EU for similar bad reasons. Greek Cyprus is in the Euro zone; Romania and Bulgaria are not, though euros are widely used by both nations.

Greece’s financial and now political crisis has infected Europe and threatens to ignite a banking crisis as destructive and dangerous as the 2008 collapse of Wall Street’s Lehman Brothers.

Don’t get me wrong. I love Greeks. They are wonderful, zesty, smart, hard-working people. The problem is that most of the hard-working alpha Greeks long ago moved to the US, Canada, Australia and the Mideast to escape their corrupt governments and unfriendly business environment. Greeks own half of America’s restaurants.

Having lost many of its most productive members, Greece’s economy became stagnant overburdened by obstructive labor unions and bureaucrats.

Greece’s socialists and conservatives both stuffed government with supporters to buy their votes. Since few Greeks paid any taxes, Greece’s corrupt political class had to borrow from abroad to keep the lights on in Athens.

Europe’s bankers poured into higher-yielding Greek debt, heedless of the dangers, believing the old truism, “governments don’t go bankrupt.” But they do.

Kicking Greece out of the Euro zone will obviously create a huge explosion. Many Greek banks, which are also active in the Balkans and Cyprus, will go under. There will be runs on the banks by panicked Greek depositors. Greek trade will be disrupted.

Europe’s reckless bankers, particularly the French, will suffer major losses on Greek public and private debt. They deserve it. They should also be fired.

Bitter medicine, but absolutely vital if the poison of too much debt is to be purged from Europe’s sickly body.
Debt addiction must be broken, both in Europe and the United States. Time for cold turkey.

Germany, once the scourge of Europe but now hailed as its potential savior, will have to join France in shoring up banks holding pots of Greek debt. Some big banks should be nationalized, if necessary. Britain and the US will have to stop trying to undermine the EU and join the rescue effort.

The Greek debacle should be used by governments to break the power of the bankers by imposing taxes on financial transactions, heavily taxing banker’s unseemly bonuses, and sharply limiting bank’s ability to lend more than they hold in assets.

ORDER IT NOW

Just this past week, the shocking collapse of Wall Street trading firm MF Global showed that even after the 2008 crash, US federal regulators have utterly failed to assure the financial system’s safety. We learn that MF Global had leveraged its capital 35 to 1, the same perilous ration that brought down Wall Street’s titans in 2008. That means it lent out or invested $35 for every dollar it held. That’s crazy Las Vegas behavior.

In the United States and many other nations, the cost of borrowing money is tax deductible. This unwarranted subsidy to borrowers encourages the dominance of finance over manufacturing, and encourages reckless risk-taking. It has allowed big finance to buy politicians in the US, Britain and Europe.

Back to the Greeks. They will be fine on their own once the poison of debt leaves their system. Greece tried to live like North Europeans – on credit. Greeks should go back to their former slower, more modest Mediterranean ways.

Bring back the dear old drachma, make Greeks work again at home, and relearn to live within their means.

But then what about the Italians, Irish, Portuguese and Spaniards? That’s the 64,000 Drachma question.