Let the Greeks drown in their drachmas

“If you die,” Crito pleaded with the imprisoned Socrates, “people who do not know you and me will believe that I might have saved you if I had been willing to give money, but that I did not care.” Socrates replied: “But why, my dear Crito, should we care about the opinion of the many?” With that reply, Socrates signaled his refusal to be released from jail through bribery and thence to flee Athens. He would instead accept his death sentence, unconcerned that future generations might misinterpret the events surrounding it.

Today, with far less wisdom and diametrically opposite motives, a heavily indebted Greek government possessing far less wisdom than Socrates is perilously close to rejecting its own rescue, albeit a temporary one. Several days ago, Greece’s creditors hammered out a bailout deal in which they accepted a 50 percent haircut for themselves in exchange for sharp austerity on the part of the Greek government. Less than a week later, to the dismay of creditor-nations and world financial markets, Greek Prime Minister George Papandreou abruptly announced a popular referendum on the deal, which has now become a referendum on Greece’s continued membership in the common European currency.

Presumably, this move lets Papandreou’s government avoid full responsibility for an extremely unpopular settlement with Greece’s creditors. At the very least, this political convenience costs one more month of destructive turmoil and uncertainty about Europe’s economic future. Clearly, the Greeks think they have their European creditors by the souvlaki — Greece is a bigger problem for Europe than Europe is for Greece. They feel confident throwing the dice on their rescue. The alternative, a disorderly default, would likely result in the Greeks abandoning the euro and devaluing their drachma to repay their debts.

Americans have lived through plenty of bailouts lately. They have already felt the pain of stepping in and using tax dollars to reward banks, corporations and individuals who made stupid or imprudent decisions with money. They might be impressed if President Barack Obama demonstrates that he has learned some lessons from our own experience — namely, that he must not commit a single American penny to any European bailout.

The sad fact is that even if the deal on the table is accepted, it probably only buys a bit of time for Greece, and at great cost. Why prolong the agony? If the Greeks decide to be stubborn, let them drown in their own drachmas, and let the European banks who unwisely lent to them — as Socrates would have put it — swallow their owls.

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