The post you are reporting:
Howard - you need to look at those organisations who have lent governments money and why they lend money to governments.
Essentially the main lender (apart from cash rich countries such as China) are pension funds. These funds need to underpin their long-term liabilities for pension payments with a low risk investment that has a guaranteed return. These are, in the UK Government Gilts or government bonds/Treasury Bills overseas.
If, as you suggest, every country with a massive debt defaulted and that would include the UK, pensioners, in fact those people now in retirement and in receipt of an annuity in particular, would be the big losers as their pension companies would go bust and payments would stop.
In theory there is a system to pick up the liabilities of pension companies that do go bust, but on the scale of what you suggest it simply would not be able to cope so millions of elderly people in the UK and abroad would be thrust into poverty. This would be a financial earthquake that would have further damaging implications for the markets and would send the whole world spiralling into the deepest slump in history. Job losses would rise and governments simply could not cope and the impact would spread way beyond the elderly.
We need governments to get a grip on their spending and to balance their budgets. The Euro is a menace that is seriously damaging the world economy and growth prospects. The simplistic view would be to consider its survival important, but that would not address the core structural defects of the currency. The political problems of changing the system so those structural problems get resolved are insurmountable - it would essentially remove the power of the electorate in weaker economies over their government's fiscal policy.
The only long-term realistic answer is an orderly break-up of the currency and an orderly, managed and limited default in some countries, allied with some realistic public spending cuts alongside policies that will help the private sector generate growth.
This whole problem is caused by poor and irresponsible fiscal management by too many countries in the UK, Eurozone and the USA. Right now the Eurozone is the biggest menace the world economy has because the UK and USA have more scope to act and more options.
