I am surprised how common it has become to talk about “Greece leaving the EZ” or “Greece being kicked out of the EZ” or even “Germany leaving the EZ”. As far as I know, it is legally impossible for any country to leave the EZ, much less being kicked out of it. The procedure is that a country would first have to leave (or be kicked out of) the EU and subsequently it would be out of the EZ. And then it would have to re-apply for EU-membership, if it wanted that. I would imagine that a country could probably leave the EU anytime it wants to but to kick a country out of the EU would definitely require a process, a process which will definitely take longer than 24 hours.
Suppose Greece repudiates all its debt and Greece is cut off from all new funding (including funding from the ECB). That would not mean that Greece would have to leave the EZ (among others because it couldn’t; see above). It just would mean that Greece would be a bankrupt country in the EU and probably could not pay salaries or pensions. It is not illegal within the EU to go bankrupt.
To not be able to pay salaries or pensions is, of course, a nightmare for any government but it is not a reason to lose one’s nerves right away. First, a government can delay a lot of other payments before it has to delay the payment of salaries or pensions. Also, the Greek government could pay salaries or pensions with post-dated checks and thereby create something like a secondary market for Euros. And so forth. There are no limits to creativity when one is out of cash.
The most important aspect, in my opinion, is that the EU could probably not get away with just sitting-by and watching how a member country can’t pay salaries or pensions. If one were to bet that the EU would blink first, I would consider that as a good bet.
None of that, of course, is a solution for the longer term. The solution for the longer term, in my opinion, can only be something which incentivates the economy to create new jobs; new jobs whose holders can afford a decent living while still paying tolerable income taxes; where the employers can pay tolerable corporate taxes and the owners can pay tolerable taxes on dividends. Some believe that austerity, austerity and austerity will achieve this. I would suggest that reforms, reforms and reforms will achieve that (and with reforms, austerity makes sense).