The eurozone financial system is at serious risk of collapse — which would mean calamity for the US system, too. But our government’s not prepared.

Euro-area policymakers are finally talking about the kind of bold reforms needed to fix their ailing system. But they’ve waited so long that they’re now racing against time, and a collapse can’t be ruled out.

Leveraged to the hilt and broadly exposed to the risky debt of countries on the brink of default, many euro-area banks are floundering, so depositors and other bank creditors are running for the hills. Unless the run can be halted, it will at some point shut down much of the banking system in the euro area.

Such a convulsion would cause untold hardship for eurozone countries. Married through a common currency, these countries sink or swim together. There’s been no legal or economic provision for divorce, so a colossal mess would result. That’s why S&P’s bond raters recently put 15 of the 17 eurozone nations on notice about a possible downgrade.

Don’t feel smug: If the euro-area breaks up, America will suffer wide-scale collateral damage.

Financial markets everywhere would freeze up. And even though investors would flee to safe assets like US Treasuries, many US financial firms would be forced to scramble for funds — perhaps having to do “fire sales” of their assets, taking massive losses to realize cash in hand.

The Federal Reserve has powerful tools to respond to such a liquidity crisis. It could flood the market with support and lend to solvent banks. But that might not hold back the financial tsunami.

Indeed, exposure to bad euro-area sovereign debt could threaten the solvency of US financial firms, too. After all, Jon Corzine’s brokerage firm, MF Global, blew up on bets on European debt just last month. Are there others? (...)