Bankruptcy doesn't "Loom" as The Washington Post alleges. It isn't just "a real possibility". It has happened, and it happened some time ago.
The negotiations for the past several months, or years really, have been about how to handle the bankruptcy.
Greece has been unable to pay its debts for years, and so they did what happens in many bankruptcies -- they negotiated a repayment scheme that would allow the creditors to receive some fraction of what is owed them.
This is the same thing that happens with many bankrupt firms that have some promise for "reorganizing" and "restructuring" their debt. This is what happens if the firms have some promise for the future. Otherwise they go into liquidation.
I don't see liquidation as a viable option for Greece ;-) , but something akin to it might well happen as the major powers vie to see who can win and buy favour with the Greek voters.
More importantly, people both inside and outside Greece must accept the fact that Greece is bankrupt and has been for a long time. They are merely arguing about what to do for the future.
The outcome will determine not whether, but how the residents of Greece will have to deal with austerity. They cannot continue to live beyond their means.
Look for Greece to repudiate its debt and go off the Euro. That might not happen, but it seems the most likely possible outcome. Look for the Greek gubmnt to print more drachmas, then, to finance itself as lenders shy away from buying Greek debt.
And if it doesn't get pensions, tax evasion, and other fiscal problems solved domestically, Greece's printing of more and more drachmas will create ever-increasing inflation.
What is even more worrying for me, though, is that if the inflationary scenario unfolds, the gubmnt in Greece could then impose price controls, leading to Soviet-Union-Venezuelan-type shortages, massive queuing, and even more social unrest.
Whether through austerity required by the creditors through restructured loans, or through an inflation and devaluation implicit tax, Greece's residents will have to tighten their belts.