I come from Argentina, one of the only countries in the world that has moved from the ranks of the developed world to the less developed world. Argentina's GDP per capita was higher and better distributed when I was born in the '60s than now. And as recently as 2002 the country was on the ropes with nearly half of the population living below the poverty line, the largest default in human history (3 times the size of Enron) and enormous unemployment.
Yet, declaring default and mostly not paying its foreign debt turned out to be a blessing in disguise for Argetina. After defaulting borrowing became impossible, most credit disappeared and the economy became a mostly cash/equity game. Since then, surprisingly, the country has been doing better and better. Argentina has grown at 9% compounded -- all this while having very little consumer credit, very little foreign debt, very little national debt, very little corporate debt and very little mortgage debt.
In Argentina, cash really is king as the other forms of payment are practically non-existent. So as the world goes into a US-originated credit crunch, Argentina finds itself in a unique position: that of having high reserves, no net debt and isolated from global financial turmoil. It is ironic that the U.S. has been going around the world promoting credit as the cure to anemic economic growth using the IMF and the World Bank as its flagships and now finds itself intoxicated by its own medicine. In the meantime, former failed states such as Argentina discover that a mostly equity-based economy is much better in times of financial crisis, that the indebtedness that the US was predicating for decades has a lot of drawbacks. Especially when you become, by far, the largest debtor in the world, your currency sinks and people begin to wonder if it still makes sense to continue to collect your paper.