I'm suspicious that many arguments about how disastrous a sovereign default would be rest to some extent, perhaps mildly, on patriotic irrationalism. I was discussing the possibility of a UK default recently and whilst I wouldn't say it'd definitely be "a good thing", I am keen to separate the economic implications from emotive arguments such as "loss of national pride" or the fact that so many refuse to consider the UK to be "just another country" - our differences with Greece today or Russia in 1998 is a difference of scale not scope.
Argentina is often held as an example of the misery and suffering defaults cause, but I've often suspected whether it's an appropriate point of comparison. Is that precisely why it's so infamous? Consider the following from The Economist:
An IMF study by Eduardo Borensztein and Ugo Panizza counts as many as 257 sovereign defaults between 1824 and 2004. Between 1981 and 1990 alone, there were 74 defaults
… A study in 2006 by a trio of economists at the Bank of England found that countries which defaulted between 1970 and 2000 had both a higher bond spread and a lower credit rating in 2003-05 than countries with the same debt-to-GDP ratio which did not default.
…. Only the most recent defaults matter and the effects on spreads are short-lived. Messrs Borensztein and Panizza find that credit ratings between 1999 and 2002 were affected only by defaults since 1995. They find that defaults have no significant effect on bond spreads after the second year
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