Tearing up the contract

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Debt troubles in Europe that looked like they were about to end now look precisely the opposite.

The message from voters in Greece is that this is just the beginning. And while this sounds vindictive, the message could be easily flipped to sound like this is the beginning of a time to heal. It's just that the rest of the eurozone isn't going to like it very much.

In the first place, Sunday's election flipped the power structure in Athens such that Greece paying back billions loaned by the European Union and the International Monetary Fund now appears unlikely.

The European Financial Stability Facility said Wednesday it would hold back $1.2 billion from a trance of $6.7 billion that was to go to Greece Thursday. Simply enough, the EFSF said the $1.2 billion would be released "depending on the financing needs of Greece." But the message is perfectly clear. As politicians pledge not to pay back billions of dollars, it seems odd that the facility is, in fact, sending along 80 percent of the funds due on Thursday. Talk about throwing good money after bad.

When the dust settles, one has to imagine a eurozone without Greece. After all, many economists -- and, apparently, many voters in Greece -- have been imagining this possibility for some time.

As Europe gets indignant about having to bail out a country with a short work-week, an generous retirement system and a notoriously weak tax collection system, there are economists who have long espoused the strategy of Europe in effect giving up its codependent expectations and allowing Greece to heal on its own.

Greece could have avoided the multi-billion millstone around its neck all along.

Adopting its own currency in a contingency plan would have allowed Greece's new currency to seek its own level. Greece could have kept its assets -- its airports and its beaches -- or sold them on its own terms. Greek goods would have been priced cheaply until the new economy found some traction, but the value of its new currency would have risen in time.

Europe could have saved its billions of dollars in bailout funds, its political headaches and its dignity. Now, everyone is backed into a corner.

On a grand scale, Europe gave Greece a subprime loan. In the United States, when this backfired many homeowners choose to walk away from their mortgage loans, take their credit rating lumps and move on.

The powers that be, of course, hate this plan. Banks hate this plan. It sounds like anarchy. Now, it's beginning to sound like Greece.

On international markets Thursday, the Nikkei 225 index in Japan lost 0.39 percent, while the Shanghai composite index in China was flat, rising 0.07 percent. The Hang Seng index in Hong Kong shed 0.51 percent, while the Sensex in India dropped 0.36 percent.

The S&P/ASX 200 in Australia rose 0.48 percent.

In midday trading in Europe, the FTSE 100 index in Britain gained 0.38 percent, while the DAX 30 in Germany added 1.04 percent. The CAC 40 in France gained 0.55 percent, while the Stoxx Europe 600 rose 0.62 percent.