Okay I don't know the exact cause of the '08 financial crisis. But I do know that there is corruption in the private sector and probably more rampant than in the public sector simply because we are talking about vaster sums of money. I worry about placing the private sector on a moral pedestal.

Also capitalism has its own business cycles and precipitates its own economic disasters quite effectively without government intervention. Its quite unfair to place all the blame for economic failures on the government.

c.f. http://en.wikipedia.org/wiki/Business_cycle

Upon reading the above linked Wikipedia article on business cycles--which is something that interests me not in the least--I realize that my assumption that business cycles/fluctuations are endogenous to capitalism is a Keynesian idea....surprise, surprise
The interesting fact is that economists have really no consensus on the cause of business cycles.

Yes exactly. I think there is a false alternative between public centrally planned economies and Keynesian economics. Neither one will work. Central Planning creates corruption and a overbearing powerful government that starves the private sector. Keynesian economics creates a crony capitalism where the government and large companies collude to launder money for campaign financing in return for political favors against their competitors.

Really what the country needs is an Austrian style economic system. One where government doesn't have the ability to print money and run up enormous debts. Also one where companies do no have the ability to use government help to slant the playing field against their competitors who are playing fair.

Hayek's "Road to Serfdom" might be an excellent book to read if you are looking for alternative way of looking at things. I should probably re-read it myself; seeing as it has been many years.

In absense of reading the book; wikipedia can at least give you the premise; but definitely not a good substitute for the book which is incredibly well written. http://en.wikipedia.org/wiki/The_Road_to_Serfdom

Ugly; Inflation is a form of default. If you don't accept that then you are not looking at the big picture.

Consider this. If I owe you 1 million dollars. That is only a valid debt if I cannot print dollars. Meaning I assume that you are being paid back in dollars worth the original amount. This is the reason for interest on a loan. However if I have the ability to print dollars; then what stops me from printing a million dollars and then paying you back? Obviously you would object to this because the millions dollars wouldn't have the same buying power as the original owed amount of money.

So unless you disagree with the above; inflation is a valid form of default. This is only type of default that large nations ever do.

Sure they always pay back their debts; but they pay them back with a worthless currency; just look at Germany after World War I. This is very much historically supported.

So if you are asking if I think that the USA will default in the traditional way; of saying sorry we wont pay you back. Maybe; but not likely; the current administration would just prefer to pay the debt with worthless dollars.

As far as AIG and Lehman; I think they both assumed they would be bailed out.

I know all my friends at Lehman expected to be fine. They were completely stunned by the consequences.

keyensianism = dead

no pun intended

I think there will be multiple forms of default:

1) Inflation, as previously stated, will rise--probably to much higher levels than we've seen in recent history. One can hope we won't see hyperinflation like many 3rd world countries have, but I'm not entirely sure we won't.

2) Medicare/Medicaid services, and other health insurance plan services, will be cut. This might take the form of queuing up patients, rationing like in the article, expanding the procedures not covered, or making it harder to prove you "need" a procedure.

3) Social security benefits will be cut. This is the other elephant in the room. I certainly hope that nobody over about age 40 is expecting any social security benefits. If they remain, I expect they will be a whole lot less than what is currently promised. The "retirement age" will continue to be raised, to the point where a lot more people will die off before they see a dime, and the benefits paid to the rest will be drastically reduced, probably to the point where it will seem ridiculous to even have it. A wholesale collapse of social security is probably more likely, in the long run.

I expect there may be other forms of default as well.

In terms of government health care though, I think the whole concept is doomed from the start. My father did business in the Czech Republic right after the communists left, and he had medical doctors working for him in his tourist coffee shop, because it was more lucrative than practicing medicine. Now you explain to me how that's an effective system, and how that will work just fine for us here in the USA.

Canadian healthcare? From the wikipedia article on socialized medicine about Canada's health system:

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Waiting times

Although life threatening cases are dealt with immediately, some specialist services needed are non-urgent and patients are seen at the next available appointment in their local chosen facility.

The median wait time in Canada to see a specialist physician is a little over a month with 89.5% waiting less than 3 months.[64]

The median wait time for non-urgent diagnostic services such as MRI and CAT scans[65] is about half a month with 86.4% waiting less than 3 months.[64]

The median wait time for elective surgery is a month with 82.2% waiting less than 3 months.[64]

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I don't know about you, but I'd prefer not to have to wait 1-3 months to see a specialist or have surgery. I'd at least like the option of seeing one sooner.

Another area to consider though is medical innovation. What country has the most innovation? Well, the USA of course. According to a NY Times article, between 1996-2006, 12 Nobel prizes for medicine went to American-born scientists working in the USA, 3 went to foreign-born scientists working in the US, and 7 went to foreign scientists in other countries. 15 out of 22, all in the USA.

Now what do you think will happen if the medical industry is completely government controlled, where the government sets pricing for every new service that comes on the market? Do you really think American medical research companies are going to invest as they have in the past, when they now have no market except what they can convince the government to pay?

Well gee, the solution must be to have governments subsidize the research. Brilliant, I'm sure that will get the best and brightest to get right to work on the latest medical innovations, rather than finding a more lucrative profession. Just like the Czech Republic.

When your nachos are being served by a former M.D., don't come crying to me.