This chart from the BBC shows who owns how much of Greece's debt.
No wonder Germans are concerned about the size of their loans to Greece and about Greece's inability to even meet the interest payments on those loans.
Repaying the loans is not the issue. So long as a borrower can obtain new financing, the loans can be rolled over in perpetuity.
But when lenders begin to suspect/fear the borrower cannot or will not be able to obtain new financing to re-fund the debt, when borrowers reach a point at which they can no longer service the debt (i.e. meet the interest payments on the debt), default is inevitable.
Now let's see if, like some major financial institutions in 2007, Greece is too big to fail. Will Greece be treated like Bear Sterns or like Lehman Brothers? My guess is Lehman Brothers. The major lenders fear that if they bail out Greece, that will create incentives for Portugal, Italy, and Spain also to resist austerity programmes.
The rosiest possible scenario is one that I tried out on Facebook last evening:
Prime Minister Tsipras will use the "No" vote as a bargaining tool. Greece will end up re-negotiating a deal that is nominally less austere but not much less. Tsipras will hail it as a new beginning for Greece, and Greek voters will hail him as a new hero. Meanwhile creditors will get most of what they offered last week.
The trouble with this scenario is that Tsipras and his gubmnt are basically and fundamentally redistributionist interventionist socialists. They will not cut pensions; they will not reform labour legislation; they will not implement supply-side reforms that will permit and encourage economic growth. And in the end, they will renege on their financial commitments.
And possibly seeing this problems, the lenders will not strike a deal with them.