The Greek economic crisis was 18 months in coming, and the pace to disaster only accelerated after an initial $160 billion bailout proved inadequate.
With Greece only days away from economic collapse, one that would probably have taken the government with it, the 16 other nations of the eurozone led by Germany and France proved that they could act, and act big, when the situation demanded.
After the necessary preliminary squabbling, the eurozone nations agreed to $157 billion in new loans to Greece, which is staggering under a $400 billion debt equivalent to 150 percent of the nation's gross domestic product.
A separate $70 billion fund will allow private investors to swap their current bonds for 30-year, 3.5-percent bonds; the bondholders have little choice but to make the swap if they want any hope of ever seeing their money. This eases the Greek government's cash outflow, but technically amounts to "selective default" because some creditors will be treated better than others.
In turn, the Greek government is expected to keep up the austerity measures that have led to general strikes, riots and an unemployment rate of over 16 percent.
One purpose of the eurozone's dramatic last-minute rescue package was to erect a financial "firewall" to stop a spreading contagion that threatened other countries, notably Spain and Italy.
The other weak sisters, Ireland and Portugal, are already under a European Union-International Monetary Fund rescue plan and will be offered a deal similar to Greece's if their finances reach that point. And leaders of the eurozone made it clear they were ready to step in to prop up other tottering governments and banks, but the hope was that the bailout for Greece would be clearly "an exceptional and unique solution."1 comment on this story
There is no guarantee this second Greek bailout will work. If it doesn't, there is a pool of rescue money called the European Financial Stability Facility with $600 billion in ready funds.
A single currency was one of the great creations of the EU, but the crisis precipitated by the recklessness of a member nation suggests that the EU may have to go beyond a common currency to common fiscal policy and uniform financial institutions.
There's a lesson in this for the United States: If the Europeans can reach agreement on Greece's debt, surely we can reach agreement on our own.