WE NEED TO BE: U.S. Not Ready For Euro’s Fall.

The eurozone financial system is at serious risk of collapse — which would mean calamity for the US system, too. But our government’s not prepared. Euro-area policymakers are finally talking about the kind of bold reforms needed to fix their ailing system. But they’ve waited so long that they’re now racing against time, and a collapse can’t be ruled out. Leveraged to the hilt and broadly exposed to the risky debt of countries on the brink of default, many euro-area banks are floundering, so depositors and other bank creditors are running for the hills. Unless the run can be halted, it will at some point shut down much of the banking system in the euro area. . . .

Don’t feel smug: If the euro-area breaks up, America will suffer wide-scale collateral damage. Financial markets everywhere would freeze up. And even though investors would flee to safe assets like US Treasuries, many US financial firms would be forced to scramble for funds — perhaps having to do “fire sales” of their assets, taking massive losses to realize cash in hand.