The media, as well as their good friends and associates in the White House, are cheerleading hard for a bailout "deal" that will keep Greece in the Eurozone. Is that in Greece's interest?
Since the original bailout deal, the Greek economy has done a nosedive. A deal along the lines presented by Tsipras would prevent any economic recovery in Greece and likely reduce the Greek economy to an empty shell. (That is why Greece would very likely not live up to any deal). Greece cannot survive a new deal.
So, what should Greece do? What should the Eurozone do?
The best solution is for Greek to do a debt workout, offering their creditors 20 cents on the dollar in full and complete settlement of their outstanding debt. That would be about $ 60 to $ 70 billion which could be advanced by the Eurozone to pay off all outstanding Greek sovereign debt. The Eurozone could forgive that $ 60 to $ 70 billion, leaving Greece completely debt free. Then the Eurozone could announce that, in the future, the Eurozone will not be responsible for member country sovereign debt -- i.e. no future bailouts will be considered.
If this solution were adopted, leaving Greece in the Eurozone, the Greek economy could, relatively quickly turn around. It is also very likely that the needed economic reforms would take place, enacted by the Greeks themselves without outside prodding, in order to enable Greece to re-enter the sovereign debt market.
This would be a bitter pill for the Eurozone, but far, far cheaper than the pill that will come later, if the Eurozone does a bailout "deal" that extends and increases Greek debt, and, by implication, leads to increased bailouts for Spain, Italy, and Ireland.
Failure to cut their losses in the Greek debacle, could, in the short run, lead to political upheaval in Greece that could see the end of the Greek democracy as well as the end of Greece's role in NATO, pushing Greece inexorably into Putin's orbit. Since the fundamentals in Spain, Italy, and Ireland differ only in degree from that in Greece, a Greek "deal" will, in time, lead to political instability in these countries as well.
Both Greece and the Eurozone can benefit from a truthful moment. Only by a forthright admission that European sovereign debt is unsustainable and an unequivocal statement that the Eurozone will no longer provide a credit backstop for profligate countries can Europe be saved from future economic and political catastrophe.
The Eurozone had a very cheap opportunity to cut their losses in 2010. Now, they have a second chance to cut their losses. Doing a debt workout is a win-win for Greece and the Eurozone.