The elite and the mainstream media are aghast apparently, that the Greek PM Papandreou has the temerity to call a referendum on the latest and greatest magic trick to 'resolve once and for all' the Euro debt crisis. How dare a politician ask the populace what it wants ? The government might well fall long before a referendum, and the questions on the referendum have not even been crafted, but the idea has lots of merit. Give the Greeks a choice between Euro-welfare handouts, along with austerity; and a new Drachma and exiting the Euro zone through a controlled default. The second solution would be better for all concerned, though it is unlikely that the Greeks would choose such an option.

A Greek default would provide a lesson in what happens to countries that can't live within their means. The sight might even be enough to terrify lawmakers in Italy to get serious about fixing their unfunded pension promises and other antigrowth policies. The serial bailouts sure aren't doing the job.

Even now—two years into the crisis—few of Europe's elites are talking about the need to restore growth by means of economic liberalization. Consider Greece: The World Bank recently published its latest annual "Doing Business" survey, and for all of its alleged reforms Greece rose all of one spot to 100th this year in the world rankings in the ease of doing business. That's just behind Yemen, though still ahead of Papua New Guinea. When it comes to investor protections, Athens ranks 150th.

The only good news in those figures is that Greece has plenty of room for improvements if only its political class had the courage to undertake them. However the Greeks vote in a referendum, this is the only route to an economic future that offers something better than penury or permanent indebtedness.

Greece should mimic Brazil's actions in the late 80s and early 90s. Exit the Zeuro-zone; raise inflation, inflate away part or most of its debt; in year 3 or 4 raise interest rates; bring inflation down to 7 or 8 %; attract capital and implement during this period meaningful economic, political and social reforms.  The only reason France and Germany are interested in Greece is to save their country's banks of course.