Shortly after Greek Prime Minister George Papandreou took office last fall, he learned that he’d inherited a massive booby prize: a budget deficit that was twice the amount the previous government had disclosed. But, when Papandreou came clean and promised to address the problem, the financial markets reacted violently. Interest rates soared, adding billions in debt-service costs to an already dire budget picture. And so, when Papandreou arrived in Washington in March, the stated reason was to push his brief against speculators--who, he claimed, had driven up Greek borrowing costs to usurious levels. “[We] were bold enough to reveal these problems,” Papandreou said at the time. “But we were also penalized for revealing these problems.”

Unofficially, however, the point...