Greece joined the group of countries using the Euro as a currency. As part of the deal, they agreed, as did everyone else in the group, to abide by certain parameters as far as how big a deficit they can run and how to keep their debt under control among other things.
Now Greece has borrowed from the European Central Bank and others much more than it can hope to repay. Creditors wanted them to take steps, like lowering pension payments, increasing taxes, generally lower government spending, etc, so that they could keep making payments. The people of Greece decided that was not a good way for them to go.
In effect, Greece has declared bankruptcy. If this were a person, or a business, or even a U.S. city, the court would decide who takes how much of the loss based on long established pecking orders. Bankruptcy is an essential institution in free markets and, while not desirable, usually works pretty well in getting things back in order. It simply acknowledges that at some point, somebody’s going to have to take the loss when a model doesn’t work out and assigns the loss according to pre-established rules.
There are no such rules laid out for Eurozone members. They could, however, still reach a similar outcome if they wanted to. They don’t. What they would like to do, as was done in the U.S. back in 2008, 2009, is to convince the people that the “system” is at fault and therefore everyone (meaning the tax payer, not the banks or the creditors) should share in the loss. This is not an easy sell because it makes no logical sense. You and I had nothing to do with any of this, but eventually, through the IMF or the World Bank or our own Foreign Aid, you and I will likely pay at least part of the bill.
That’s why these things drag on so long and seem so complex. The powers that be have to keep talking in circles, over your head until you finally decide you just don’t understand and accept whatever they put on the table.