I have mentioned this blog before, but I hadn't read it in a couple weeks, so I just went back and read the last two posts (he seems to post every Monday), and I think Kunstler has the right idea about the next wave, although I hold out hope that it will not end up as apocayptically as he proposes.
My current premise is that the U.S. government will default on some portion of its debt in 2009. The amount of debt that the government is creating right now both to roll over old debt and fund new spending is mind-numblingly large, and from what I can tell, unsustainable.
Fortunately, for the federal government, our debt is denominated in dollars. Most debt defaults by foreign governments have happened because their debt was denominated in dollars, and as their currency crashed, the debt level in the local currency exploded. We will not have that problem, which means that rather than defaulting on the debt, the US government can print money. This would avoid a debt default, but would create a major inflation problem. Some commentators are talking about hyperinflation. I don't know if that is the case, but it is really a matter of degree - are we screwed or royally screwed?
The government's debt has exceeded a level that can ever be repaid in real dollars - it is either default or repayment in inflated dollars. Like the pension discussion below, inflation is much more palatable from a political perspective, and I would expect that to be the "solution".
Personally, I would prefer to see our government just declare outright default on all foreign-held debt. Apologize to the world for our profligacy, give em a little whocoodanode shrug, and wipe the slate clean. That would destroy economies around the world, infuriate all sorts of people, and probably lead to civil unrest and wars in some countries. We would go down in history as history's biggest deadbeats and would screw over millions of innocent people, but I think it would be less painful for US citizens than any of the alternatives. A ton of fictional wealth has evaporated, and the only thing governments can do now is divvy up the losses. Since the US government's primary responsibility is the welfare of it citizens and not that of those of the rest of the world, as ruthless as it would be, it is probably the best decision.
Moreover, we hold a trump card. We still have the world's strongest military by a long-shot, and while we might be ultimately responsible for creating this financial mess, there isn't much other countries can do to us without risk of retaliation.
Writing this just reminded me of a tidbit from our past (besides Machiavelli). The rant in the middle pretty much sums up the previous paragraph.