From a financial standpoint, Greece is toast. And the sooner European bankers admit it, the better for everybody -- including President Obama.
The president's vague call last week for "forceful and decisive" action to resolve the sovereign debt crisis festering in Athens and beyond needs to be, well, more forceful and decisive.
Obama should call for banks holding Greek debt to write down their bad loans, recognizing losses now rather than pretending none exist.
The same reckoning is needed for Ireland and Portugal, which similarly have no chance of paying back everything they owe. The debts of Spain and Italy make a bigger and more complicated puzzle, but being realistic about them only can help.
Getting past the current crisis matters for a U.S. recovery still stuck in neutral. Europe is a huge trading partner and financial hub. A recession there would hurt here.
The still-fragile U.S. banking system remains vulnerable to problems with European counterparts. The volatile action in financial markets over recent weeks reflects a growing lack of confidence because of the feckless official response so far.
The European Central Bank and European political leaders appear to be sidelined by incompatible interests. Who's in charge of the Eurozone, anyway? Apparently, no one.
It's becoming increasingly apparent that what's right for one member is wrong for another.
It would be in Germany's interest, for instance, to impose harsh fiscal austerity and strict repayment terms on Greece that no Greek political leader could accept while remaining in power.
Denial, however, is popular with everyone.
It was instructive to see the chief executive at one of France's biggest banks dispute a report that he's seeking money from investors in the Middle East to shore up his institution's finances. The mighty BNP Paribas has no need for new investors, Baudouin Prot declared.
We can only hope that he knows better. Like every other European banking chief, Prot should be lining up every Euro he can, to make up for the capital hit that he and the rest will endure when they finally recognize the bad loans on their books.
While they're doing their best imitation of Japanese finance ministers during that nation's "lost decade" of the 1990s, they had better hope Greece doesn't suddenly channel the Argentina of a decade ago.
That South American nation defaulted on its debt, gave up on pegging its currency to the dollar and endured a brutal recession, but ultimately emerged from the economic wreckage much healthier.
As fast as you can say "bring back the drachma," Greece could decide to follow the same rocky course.
A partial, controlled default, a debt restructuring, a loan swap at more favorable terms -- almost any alternative action would be less traumatic for the global banking system and the U.S. economy than if countries decide to abandon their obligations.