What happened to Greece' economy is that it went from an 'independent' economy to a 'co-dependent' economy.
In other words, Greece embraced the Euro and instead of manipulating its own game, Greece had to start dancing to the large game that is manipulated by international financial standards.
They weren't used to that.
At the same time, had the stronger Euro nations not helped out Greece, then that would have been the end of the Euro.
Obviously, Varoufakis is a smart person and understood where the gamble was found.
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Why did the old Greek economy not adjust itself well to the new Euro economy?
Same issue we find with housing.
When the economy is bad, and when folks are not buying new homes like they would in a strong economy, then the people owning homes simply don't put their homes up for sale.
Instead of letting the market do its thing, and accept a lower return for one's home in a lousy economy, home owners just postpone until the economy is better again. That is what the Greeks did (the ones with the larger assets).
Yet when the economy shifts away from your city, then your city is going to be in ruins. No one is buying, no one is investing in housing upkeep. The entire region is then going under.
Greece did not want to become the Alabama of Europe. Rightfully so, because we should never try to have a distance between poor and rich in any rich nation in the world like we have in the USA. We are not the right example, capitalism failed in the USA to deliver to our poor.
Yet in Europe the poor are not as poor as the poor here, and none of the regions (nations) wants to become Alabama.
Well-played by Greece. Well-played by the other European nations as well, Germany obviously one of them.
The Euro nations believe in one another, and they invested in one another, helping out when that was most needed. No black hole inside the Euro zone, so that is different from the black holes we do have in the dollar zone. In general, their inner cities never died, their transit never crumbled, their poor are not as destitute.
In Europe, capitalism is smart. In the USA, capitalism is two-dimensional.
