Someone posted this a few days ago, but I can't find it now, I believe it may have been within a thread.
I think the argument has a fundamental flaw when it says no country has ever recovered from such a debt before. The fact is that the world has never been in an international mutual debts situation like this before so comparison is invalid. Yes, we, the USA and many others owe vast sums, but we are also owed vast sums, part of the madness being that those who borrow also lend in a mad merry-go-round of cash flow. One could argue that the ultimate losers in any widespread failure will be the Chinese and the Arabs since they are the ones in positive cash balance not being repaid. Like any lender they took the risk and the risk could be a bad one. What could they do about it? Like any lender faced with an insolvent debtor, absolutely nothing but swallow the loss.
The world recovered from 1929 and it will do so again in any widespread crisis, simply because in a financial crisis nothing real in the world is actually changed, only the superficial layer of money equivalence that we overlaid being different.
