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The debt crisis in Greece has European economists befuddled--and clutching at ideas like establishing a European Monetary Fund, which is likely to undermine, not enhance, the stability of the European Union.

Greek politicians and budget officials played fast and loose with budget accounting tricks to hide their profligate spending sprees in years past. Now Greece faces debt repayments of $30 billion in April and May 2010. It's not yet clear whether financial markets will acquiesce to rolling over that debt without demanding significantly higher interest rates--a prospect that is causing widespread consternation and a scramble for a quick solution.

Greece failed to observe a fundamental requirement of the monetary union: "stability." But the E.U.'s Stability and Growth...