Here is a nice chart showing economic growth before and after some big government defaults.The economies of Argentina, Uruguay, Russia and Indonesia grew faster in the years after the default. An orderly default allows countries to wipe the sleight clean and re-organize economic priorities in an orderly manner. Default should only used as the last option, but sometimes it is a necessary step to take for countries to rebuild themselves. How the situation in Greece plays out is currently an unanswered question but financial markets have already priced in a partial default with the expectation that holders of Greek government debt are likely to get between 10 and 20 cents on the dollar. This is much lower than the 50% writedown that EU leaders recently agreed to.