How bad would default be, really?

In the case of the United States now, they say such short-term pain would be worth it if it helped lawmakers achieve a broad-sweeping plan to fund the country’s future – including costly programs like Social Security – without running such a large deficit. A few on the fringe even say the country would be better off if it wiped its hands of some or all of its debt because it might mean future generations of workers will not have to see taxes go up as much as they are otherwise likely to do.

“We have an opportunity now to get ahead of this and we might not in a few years,” said Christopher Whalen, who writes the Institutional Risk Analyst news letter. “If a democracy requires more time, then take more time. I don’t think a default is as big a deal as people say it is because where do investors go?”…

Mr. Hummel, a professor at San Jose State University, has been predicting since 1993 that the United States will default on its debt. His view is driven by the unfunded liabilities the government has taken on for future benefits, and he says the nation will simply not be able to pay them or fund them all with debt.

He says it’d be better to cut bait now.

“If I had my choice, I would repudiate the entire debt and use any available assets to pay Social Security,” he said.