answer:This is done all the time, but the bill still has to be picked up by somebody. The U.S. has occasionally forgiven some foreign debt, but it gets paid for by the taxpayers. The credit markets are very complicated. For example, when you get a mortgage from a bank, they usually sell the mortgage to another bank, who then services the mortgage. The bank that services the mortgage will often buy something called a CDS contract to protect them against default. CDS contracts are like insurance, but there isn’t enough equity backing them, which is why the financial system is in near meltdown. I don’t pretend to understand all of the nuances, but the bottom line is that the piper must eventually be paid by someone.