Policy makers have yet to get this.

This is true even at the International Monetary Fund, which was created after World War II to deal precisely with such situations. Its approach to the European debt crisis, five years ago, started with the blanket assertion that default in advanced nations was “unnecessary, undesirable and unlikely.” To justify this, it put together an analysis of the Greek economic potential that verged on fantasy.

Even as late as March 2014, the I.M.F. held that the government in Athens could take out 3 percent of the Greek economy this year, as a primary budget surplus, and 4.5 percent next year, and still enjoy an economic growth surge to a 4 percent pace.

How could it achieve this feat? Piece of cake. Greek total factor productivity growth only had to surge from the bottom to the top of the list of countries using the euro. Its labor supply had to jump to the top of the table and its employment rate had to reach German levels.

The assumptions come in shocking contrast to the day-to-day reality of Greece, where more than a quarter of the work force is unemployed, some three-quarters of bank loans are nonperforming, tax payments are routinely postponed or avoided and the government finances itself by not paying its bills.

Peter Doyle, a former senior economist at the I.M.F. who left in disgust over its approach to the world’s financial crises, wrote: “If ‘optimism’ results in serial diagnostic underestimation of a serious problem, it is no virtue: At best, it badly prolongs the ailment; at worst, it is fatal.”

Creditors, of course, do not generally like debtors to write down their debt. But that’s not how Germany and its allies justify their approach. They rely instead on a “moral hazard” argument: If Greece were offered an easy way to get out of debt, what would prevent it from living the high life on other people’s money again? What kind of lesson would this send to, say, Portugal?