Peter Goldmark, a former budget director of New York State and former publisher of the International Herald Tribune, headed the climate program at the Environmental Defense Fund.

In 1975, New York City was tottering on the edge of default. (Disclosure: I served as Gov. Hugh Carey's budget director during that period.) Putting in place a sound, long-term solution was painful and difficult -- but the city was rescued and disaster averted, with the state of New York playing the key role.

I am reminded of all this because of what is going on today in Greece, the present epicenter of what is really a crisis of the entire euro zone.

In 1975, we were acutely aware of our responsibility to make sure that the cuts and the pain were borne as fairly as possible among the different stakeholders. Greece and Europe face a similar challenge today.

There are a lot of parallels with the New York City crisis of 1975: banks that loaned way beyond what was justifiable; workers who enjoyed disproportionate and unaffordable benefits and who felt the budget was being balanced on their backs; and citizens who faced higher taxes and fewer services.

In the New York City crisis, we legislated a "moratorium" of debt repayment on city notes -- a polite word for telling those who had lent the city money they were not going to get repaid right away. We negotiated "givebacks," including salary reductions, with public employee unions, which they could recoup only when the city returned to financial health. And budgets across the entire city government were cut -- but not cut equally, because we did not want the brunt of the cuts to fall on the poorest, the sickest or the most vulnerable.

Even localities outside New York City, many of which had not caused or even known of the city's fiscal shenanigans, felt the pain because statewide tax increases and service cuts were needed to support the state effort to get New York City back on a sustainable financial basis.

As we look at the contortions in Greece and the strains on the European Union as a whole, it is fair to ask: Who are the stakeholders and what are they going to have to give up to stop Europe from imploding? The list includes banks that underwrote or bought Greek debt; workers in the public sector whose wages and benefits will be affected; citizens who will be hit with higher taxes and fewer services; and the governments of Europe, which helped create the problem by looking the other way when Greece and others blatantly violated the standards for sound fiscal management that the EU itself had laid down.

In the New York City brush with default, one of the factors that finally persuaded the federal government to assist was that "NY-label paper" (that is, bonds and notes) was scattered throughout the portfolios of hundreds of the nation's banks, posing the threat of national contagion from a New York default. Are there securities today in your U.S. money market fund guaranteed by European banks that hold Greek paper? For many, the answer is yes. Therein lies the threat of international contagion.

But Europe will have one additional problem: It is seeking to achieve a workout that treats the various stakeholders with rough equity voluntarily. There is no body in Europe that can legislate or impose a solution -- the role played by New York State in 1975. Few dare yet to say it out loud, but what looks today like riots and financial turmoil in Greece is probably in fact the visible plume of a seismic, continentwide fiscal restructuring in Europe that may have to be imposed and financed with the help of forces outside Europe. That means the United States, China, the International Monetary Fund and others.

Stay tuned: We are at the beginning, not the end of this drama. And it will affect us all.