American impressions of the Greek crisis tend to be dominated by German / northern / creditor talking points. I explained the real situation in this post back in January, when Tsipras and his Syriza party were originally elected. The reality is that as a condition for the loans that kept Greece (and other southern countries) afloat, the European Union, which nowadays basically means Germany, has imposed a regime of austerity -- deep spending cuts and a fixation on deficit reduction despite economic contraction (similar to what conservatives have been advocating for the US) -- which made it impossible for the southern economies to recover. Due to austerity policies, the Greek economy has already shrunk by one-fourth, pensions have been cut by almost half, unemployment has exploded, infant mortality has gone up due to reduced health-care spending, etc., etc., etc. It's somewhat like lending money to a person but demanding, in return, that he lose his job.
If one assumes that the EU is really an association for mutual benefit, it makes no sense. But in fact the EU has evolved into a sort of economic colonial empire in which the economic relationships between the ruling center (Germany and, to a lesser extent, the rest of the north) and the "colonies" are rigged to advantage the former at the expense of the latter. Part of the reason Germany has thrived in recent years is that austerity policies and the common currency have crippled southern countries which, especially in the case of Italy, used to be serious competitors.
(It is, of course, the German government that is doing this. The average German probably has no more idea what is really going on than the average American understood our own government's economic subjugation of much of Latin America during the Cold War.)
In the latest round of "negotiations", the creditor side has been demanding more of the same. In electing Tsipras the Greek people were rejecting further austerity, and in the referendum they affirmed this verdict. The EU needs to stop putting conditions on its loans which make it impossible for Greece to recover or, therefore, to ever pay back the loans.
But it increasingly seems that the EU wants to make an example of Greece to punish it for its rebellion, as a warning to the other "colonies" not to defy the rule of Brussels and Berlin.
It's not clear what will happen next. The EU might blink and agree to lend money without insane conditions attached. But this looks unlikely. The Greeks might blink and agree to submit to more of those insane conditions, continuing on the path to total ruin and perhaps a military or fascist take-over. More likely, though, neither side will give in far enough, and Greece will end up unable to keep paying its debts, will default, and will have leave the euro currency and possibly the EU itself.
The Greeks are very afraid of that last possibility (which is why this situation has dragged on as long as it has). In the short term, the effects would be horrific. The country's credit would be ruined. Its new separate currency would probably depreciate dramatically, multiplying the relative size of its debt (which would still be denominated in euros). The psychological impact of being "expelled from Europe" would be crushing. But in the long run there would be a chance of recovery. Under the present situation, there's nothing ahead but more and more austerity and impoverishment for ever and ever.
Given the EU's vindictive and sadistic (no, the word is not too strong) stance toward Greece, it's a safe bet that it would actively try to sabotage any Greek recovery after a default and departure from the eurozone. There are Syriza-like parties of various stripes in Italy, Spain, and even France. The last thing the EU wants is to let voters in those countries see Greece actually prospering, eventually, after leaving the "empire".
A possible risk is that, if Greece gets too desperate, it might make some kind of deal with Russia. If Russia bailed Greece out, the price might include leaving NATO and making Greek ports available as bases for the Russian navy. Russia itself is not in the best economic shape these days, but Putin might well relish the chance to strike such a blow at the West he resents for the economic sanctions it imposed as punishment for the Ukraine invasion.
One can only hope that the US would do as much to help Greece as possible. This would offend the Germans and be difficult to sell to an American public whose understanding of the problem is hopelessly warped by biased media coverage. But it would be the right thing to do, and in our own interest.
Further essential reading:
How the media are distorting Americans' understanding of the crisis.
The "no" vote means a chance to stop the bleeding (Krugman).
Argentina's example shows that leaving the euro might not be as bad as the Greeks fear.
Greece is fighting for democracy itself.
There are parallels between Greece's present situation and Mohammad Mosaddegh's struggle for independence and democracy in Iran in 1953.
Update: Please note in particular this quote from the fourth link above:
Precious little of the bailouts went to Greece; instead they went to the European banks that had recklessly lent in the first place. While Germany’s postwar economic renaissance owed everything to debt relief – including from war-devastated countries such as Greece – Athens was denied the write-offs it desperately needed. As French economist Thomas Piketty points out, "Germany is the single best example of a country that, throughout its history, has never repaid its external debt" [emphasis mine -- Infidel753].