Greece is in trouble either way and default may turn out to be the quickest way out of it. As it drags on the threat of cash leaving the banks becomes more severe and there is talk of instituting currency controls to halt that (like Iceland did- they froze bank accounts and forbade any money from leaving the country). As a condition of more loans (to roll over the existing ones which they cannot pay back and will not be able to pay back in any forseeable future), lenders want more austerity- budget cuts. That will mean more job losses (their economy has already shrank about 40% since 2008) which means lower tax revenues which means more deficits and even higher unemployment (which also means more demand for social payments to the unemployed- again, adding to their deficit). Current unemployment rate is 25%. Germany, on the other hand and a major lender besides the IMF to Greece, just had their lowest unemployment rate since unification of 6%.
Default hurts too because it will make countries and businesses less willing to trade or invest with them. That too will hurt their already struggling economy but it would allow things to start rebuilding sooner.
