- US: Semantics. US is already silently defaulting by massive printing its currency (thus devaluation of its debt). Regular citizens' social security, medicare, and savings are wiped out. Still points to economic depression.
- Europe: They all will default. If one country in EU doesn't pay its debt back, why should the other countries in EU pay theirs? Major banks in EU suffers massive loss of value. Still points to economic depression.
- China: Yes, they will go through a correction. However, since they packed 40 years of economic growth into 10 years, the correction will be brutal (oversupply in housing, capacity, human resources). Still points to economic depression.
-- There is a difference between a default on debts and inflation. People can live with inflation. A default on the freaking US treasury debt would be a disaster. Why would they do that, given that they absolutely don't have to? No, it's not the same thing.
-- Also, speaking of seeing everything larger and scarier than it is, you really need to remember how good life is for most Americans. Some of the economic hard-lack stories make pretty funny reading for someone outside the US. Americans have borrowed to finance some pretty extravagant spending, and the federal government is by far not the worst of it; browse Philip Greenspun's blog at http://blogs.law.harvard.edu/philg for some stories on state pensions. At some point, they will pay for this. This doesn't mean that Americans will be rooting through garbage and living on the street; the US still has the capacity to produce more than enough food and housing. Yeah, the spending binge will be over and it will be unpleasant.
-- Europe is not going to default on all its debts. That's a dumb move, and they know it. Argentina had essentially no economy for years after its default; no jobs, no banking, no credit, no business. Iceland is not exactly partying now after its bailout. I don't think they will be standing in line to join this club, and again, this is not a question of a lack of money; Greece has a spineless government and aggressive unions, and they simply don't want to pay up and expect a bailout which won't come, or at least won't be on pleasant terms.
-- China has immense reserves to enable it to live through a correction. You can do that in a (somewhat) planned economy.
- Europe: They all will default. If one country in EU doesn't pay its debt back, why should the other countries in EU pay theirs? Major banks in EU suffers massive loss of value. Still points to economic depression.
- China: Yes, they will go through a correction. However, since they packed 40 years of economic growth into 10 years, the correction will be brutal (oversupply in housing, capacity, human resources). Still points to economic depression.