Scenarios dire unfolded here and here.
Okay, thought exercise! In place of "banks" in this story, insert your name, and in place of "Greece", insert a needy, deserving unfortunate of your choice. So, the scene is this: The needy, deserving unfortunate and you had entered into a financial arrangement. The needy, deserving unfortunate has been borrowing from you, but is not able to pay you back. The looming default threatens to play havoc with your personal finances. Enter the government! It sizes up the situation and decides for you. It decides that you must simply take a bath on the bad loans. Which is to say, the money that you had lent the needy, deserving unfortunate is gone, and you will be on the hook for it and whatever collateral risk you took along with it. You may, however, receive a token bit of chump change from the government, to ease the sting. All for the greater good, of course--unless you're some kind of hater who has it in for needy, deserving unfortunates.
Okay, now you can take out the needy, deserving unfortunates, and substitute back in bloated, profligate, cafe society wannabe Greece. You're still on the hook, though.
Links via David Thompson and I forget who, sorry!
