If I borrowed $1000 from you in 1999 @ 10% when Oil was at $16.56 / brl and gold $285 /oz. Every year you get your $100 interest payment and I borrow another $1000. Year Princple. Interest 1999 $1000 $100 2000 $2000 $200 2001 $3000 $300 ... 2011 $13000 $1300 Except today Oil is $100 and gold is $1400. What have you really gained? And how much do you lose if I default?
It is the whole culture of debt. As long as (insert false rationalization here) can be incorrectly justified. I bailed out my ex-wife twice. The third time I said that is it. As long as the the income stream is being kept active why not let it run up higher, it makes for a great bargaining tool during negotiations. The likely hood of stiffing on a debt in today's world is unlikely. I am sure there is one or several chips that can be forfeited to keep global stability. It is kind of like when a neighbor says look what I just purchased ,on a loan, there is a false sense of ownership. The reasons for most heavy debt is when a person or a nation is in a rapid expansion mode the contractual holdings may or not be back filled at a later date. The largest factor is fiscal responsibility the two nations are in a dangerous dance both parties will probably kowtow to each other. A bad lender is also to blame for the problem for not cutting someone off sooner. When obligations can not be meet, ownership is transferred and actuality sets in. Akuma
Situation ethics rules. It's OK, because they are stiffing the U.S. when they peg the yuan to the dollar by printing money and using it to by treasuries.
Everyone hits being in debt, but there are two breeds of people in getting rid of debt, one is to pay off, other other is to default.