Greece is fine.
Well, maybe not fine but if talking just their own internal spending, Greece is as fiscally conservative already as you can get while still actually requiring fiscal policy. Any tighter and they'd have social spending on par with Somalia.
But add in their debt to French and German banks and they look rightly fucked. "Look" being the operative word, as this is a textbook example of odious debt. That's debt incurred by a government without the consent of its people, from lenders operating under bad faith.
There's plenty of legal gymnastics either side can do - What constitutes the people's will? What constitutes bad faith? - but it doesn't take a huge step to say the French and German banks holding the biggest hunk of Greek debt either made loans they knew Greece could never pay back... or they're really dumb.
Let's take a trip back in Greek history - recent history, so all you amateur fascists looking to spank it to the Spartans look elsewhere. No, we're only going as far back as the 2004 Olympics in Athens, which the Greek government financed through loans from banks all over the responsible, hard-working part of Europe. Greece was already in terrible fiscal shape but it was part of the Eurozone and therefore had a whole continent to cover it - much as the United States has covered Florida all through the foreclosure crisis.
Except the Eurozone - not the same thing as the European Union - is even more Rand-y than the American GOP. When the mental midgets of Wall Street crashed the global economy and wiped out everyone's equity, the ECB didn't want to hear about "unemployment" this or "social contract" that. It saw debts in it's books that Greece owed to French and German banksters and by gum, you pays yer debts!
Greece's debt issue could be resolved in one pen stroke if the ECB recognized it as odious. But that would mean a big hit to their primary concern - Continental Banksters. Much like the SEC protects Wall Street gangsters, the ECB is deflecting the rightful public outrage at bailing out incompetent banks by laundering the money through Greece's "debt." Yes, I've said this before. It bears repeating because everyone still tries to look smart by blathering, "If we don't fix the deficit, we'll be just like Greece!"
We're already like Greece. We're just too craven to admit it.