Eric S. Margolis Worries about a bond market crash in Greece, Portugal, Spain and Italy are now worrying enough to catch the attention of normally self-absorbed American investors. Banks in the US are only slowly recovering from the 2008 crash. Here on Wall Street, there are mounting worries that a new crisis in Europe could set off another, Lehman Brothers-style international financial earthquake. The Greek debt crisis is now buffeting all of Western Europe. Frances banks are Europes biggest holders of Greek debt, some $67 billion that is fast losing value. German is close behind. Greece cooked its books, falsifying financial data for decades. The other 'Clud Med me-mbers, Italy, Spain, and Portugal may have done the same. The great 17th century French fabulist Jean de la Fontaine epitomised financial imprudence in his wonderful tale of the grasshopper and the ant. The grasshopper parties all summer, while the ant labours to store food. When winter arrives, the imprudent grasshopper starves in the cold. The ant refuses to help him. So far, the EU is not ready to spurn wayward Greece. A $160 billion European Union/International Monetary Fund rescue package for Athens is being assembled. But irate Germans are demanding more painful austerity from the unwilling Greeks, who are already rioting daily over budget cuts. Athens is being told it will have to cut pensions, unemployment benefits, and family allowances, raise taxes, and slash defence spending. Greeces powerful unions are up in arms. If the rescue fails, Athens may default on its bonds, or extend their duration, a humiliation usually associated with banana republics. Italy, no financial Gibraltar itself, holds $27 billion worth of iffy Greek bonds. Portugal and Spain face a growing financial crisis. One wonders about Romania, Bulgaria and Ukraine. Foreign exchange speculators mercilessly savage currencies of nations showing the slightest signs of weakness. Bond rating agencies have downgraded Greece and Spain to junk status, meaning that their borrowing costs will soar just as they are plunging ever deeper into crisis. Last week, the Euro dropped to its lowest level in a decade. This decline should boost Europes exporters, particularly its leading one, Germany. But the Club Med crisis threatens the EUs financial institutions with another near death financial experience after 2008. Greek government bonds are playing a similar role in the EUs growing crisis that bogus mortgage-based securities did in Americas self-inflicted financial disaster. German, French, Dutch and Italian banks hold billions of depreciating Greek and other Club Med bonds. Unless these securities are shored up, Europes banks will have to sharply cut lending and may themselves begin to wobble. All eyes are now on Spain, where unemployment just hit 20 percent. Like that other sunny but financially derelict paradise, California, Spains economy soared on inflated housing and now is in deep trouble. Fortunately, Spains well-run national banks so far remain solid, though its savings and loans banks are a mess. Up in the gloomy north, the fretful German ants are furious at the grasshoppers of the south. As in the US, irate German taxpayers are asking why they should bailout Greeks who pay little taxes and retire around 60 on generous pensions? Why bailout Spaniards who gambled with their houses, as did so many Americans? Germans have an admirable tradition of financial rectitude, a product of stern Lutheran teachings and frightful economic suffering after two world wars. But they are painfully torn between telling the Greeks to go jump in the Aegean and trying to hold Europes finances together. German Chancellor Angela Merkel shortly faces a key election on May 9 in North-Rhine Westphalia that has more voters than Greece. Some German wits have proposed Greece make good on its debts by selling its gorgeous islands. European critics claim the European Union expanded too far, too quickly, and should not have admitted Greece, Portugal, Bulgaria, Romania, and Cyprus because they were unready for admission to the northern rich mens club. Most Germans want Greece evacuated from the euro zone - 'schnell These poor but sunny Club Med nations tried to keep up with their rich northern neighbours by borrowing like crazy and hiding their debts through sleazy, Goldman Sachs-style financial sleight of hand. In Greece, the bouzouki music has stopped. Club Meds credit cards are maxed out. The German bailiffs are at the door. Khaleej Times