A default by Greece appears imminent. The country cannot collect taxes, cannot implement reforms fast enough, cannot sell assets fast enough, cannot balance its trade account fast enough, and most of all cannot grow the economy. The rescue package (I refuse to use the word 'bail-out') was always a bet on internal devaluation.
The idea was that, as the Greek economy contracted, real wages would fall relative to the rest of Europe, making Greek exports more competitive. This would stimulate the Greek labor market. Soon, industrial output would be up, unemployment would be down, and Greece would be giving to the world more than it was taking from the world; in other words it would be economically self sufficient. If there was a model for internal devaluation it would be the Baltic model. Latvia, Lithuania and Estonia went through this in 2008-2011, with huge cuts in living standards and a dramatic reversal of the trade account. Unfortunately the socio-political conditions in the Baltics were very different from Greece.
Now that this internal devaluation has failed, the only option which remains is external devaluation. There is also the question of default and how it plays out, which is what most news stories seem to be more interested in at the moment.