The intense conflict between the European Union (EU) led by Germany and heavily indebted Greece continues. On June 22, Greek Prime Minister Alexis Tsipras proposed concessions involving more taxes. On June 25, Greece’s government rejected counter-demands, risking default on an impending payment to the International Monetary Fund (IMF).

Germany is firmly established as the dominant EU economy. Chancellor Angela Merkel has insisted that the Athens government press austerity in return for more financial aid.

In reaction, Greek voters in January rebelled and voted for the radical left anti-austerity Syriza. The party surged to victory with the largest vote, but fell just short of a parliamentary majority. A coalition government was formed with the right-wing Anel (Independent Greeks). This political odd couple is united by strong opposition to EU austerity.

A payment by Greece of 1.6 billion euros – the common currency of the EU - to the IMF is due at the end of June. To meet this, EU aid is essential. Athens’ concessions include increasing some taxes. EU and IMF officials reportedly demand pension cuts and even higher taxes.

Debt default could unravel Europe’s confederation. If Greece should leave the euro, that might spark currency collapse. Failure of Europe and the IMF to support Greece financially could lead to a recession.

In these broad terms, events in Europe to some extent echo those in the United States of approximately eight years ago. Then the housing and subprime mortgage market collapse sparked a major financial crisis, then international recession.

However, such a chain of events now in Europe remains unlikely. First, only 19 of the 28 EU members use the common currency. Second, the Greek economy is relatively small, with a gross domestic product less than the market values of Apple, ExxonMobil and several sovereign wealth funds. Commercial activity is heavily concentrated in tourism and other consumer sectors, not primary industries.

Third, grumpy Greek populism is a useful wakeup call to Euro-elitists far removed from the public at large, meaning voters. The fiasco in 2005 over the proposed European constitution demonstrated the danger of European integrationists becoming steadily more utopian in perspective, and segregated from the citizenry. Referenda in France and the Netherlands clearly rejected the constitutional initiative.

The long-term success in Europe’s economic integration, plus an expanding influential body of European law, encourages bureaucratic belief that economic market coordination is the same as political unification, a serious miscalculation. Left out of that equation is unpredictable democracy, excessive national debt, and emotional populism represented in Greece.

Civil servants are relatively removed from both business and public opinion. The harsh realities of economic complexity and public suspicion tend to rein in impractical plans of Eurocrats. Indirectly, the Greece challenge is providing useful lessons for Europe as a whole.

Fourth, effective government regulation, established in the U.S. during the New Deal, is essential. Financial irresponsibility which led to the last recession was facilitated in important ways by abolition in the late 1990s of the U.S. Glass-Steagall Act. That law from the Great Depression era strictly segregated commercial from speculative investment banking.

Bailing out failed financial institutions, and nations, is not enough. Roots of excessive speculative risk must be addressed effectively. Europe led by Germany is friendlier to such regulation than is the U.S.

Over time, Chancellor Merkel has skillfully juggled complex, varied interests to maintain national and EU cohesion. We all benefit, greatly.

Arthur I. Cyr is Clausen Distinguished Professor at Carthage College in Wisconsin and author of “After the Cold War” (NYU Press and Palgrave/Macmillan). He can be reached at acyr@carthage.edu