The euro crisis has so sharply divided the opinions of politicians and economists that it is almost impossible to tell who's right.

Of course, everybody agrees that the debt problem, which is spreading from the smaller economies of Greece, Ireland and Portugal to the much larger economies of Spain and Italy, and possibly France, might plunge the world into a deep recession if not resolved. While some liberal politicians and economists are clamoring for global efforts to stimulate growth, others, labeled as conservatives, are holding fast to the conviction that throwing good money after bad will only create bigger problems in future.

Watching the unfolding drama in Europe, many Asian countries, which have a tradition of frugality that loathes any form of spending beyond one's means, are naturally taking the side of the conservatives. I grew up in Hong Kong where balance budgeting is widely held as sacrosanct. For that reason, I found it strange and unacceptable that some prominent economists in the West have put the entire blame of the Greek sovereign debt crisis on the intrinsic flaw of the euro system and the greed of European banks. Greece, they claimed, was the victim.

To be sure, the euro system is not perfect and bankers can easily get carried away by their obsession to make a profit, but as the saying goes it takes two to tango.

Even the most forgiving economists have expressed dismay at the many Greek excesses, notably the thoroughly corrupt tax regime, shockingly inefficient state-owned monopolies and wasteful government spending. Labor productivity is low by European standards, although Greek workers work longer hours than their counterparts in other European economies.

There is an obvious need for deep social and economic reform if Greece is to stay in the eurozone. The painful and protracted process of reform is already reflected in the surge in unemployment and declining income of those who have held on to their jobs. The contracting economy is making it even more difficult for the government to finance its debt. The alternative is to drop the euro and default on part, if not all, of its foreign debt. But that idea was rejected and the country has opted to accept, albeit grudging, the bailout terms imposed by the European central bank-led lenders.

Meanwhile, the major European economies, including Germany and France, have agreed to set aside a multi-billion dollar fund to help stimulate economic growth in the debt-ridden countries in the eurozone. This and other pro-growth initiatives, however, should not be mistaken as a substitute for reform, which is essential to long-term economic health.

We in Hong Kong endured a long and painful internal adjustment after the outbreak of the Asian financial crisis in 1997. To preserve the link exchange rate regime, which was deemed essential to maintaining financial stability, we denied ourselves the option of currency devaluing, a strategy adopted by many neighboring economies to enhance competitiveness.

But we understood we were the victim of an asset bubble of our own creating and must bear the brutal economic adjustment through rising unemployment, falling wages and collapsing asset prices. It was an adjustment remarkably similar to the one that the Greek people are being asked to bear now.

The economic stimulus program agreed by the European economic powers can help soften the brunt of the adjustment. But the process must be allowed to run its course until economic equilibrium is restored. It took us nearly seven years to reach that point in the last recession, which was further intensified by the outbreak of the SARS epidemic, severe acute respiratory syndrome, in 2003.

During that ordeal, we knew that we could only count on ourselves to pull through; constantly reminding ourselves of the words of Singapore's former prime minister Lee Kuan Yew, who, when he was in office, repeatedly told his people: "Nobody owes us a living."

(China Daily 07/02/2012 page8)