This for me is one of the holy grail questions in economics. Saxo Bank predicts Japan will be first to take the red pill next year. Some commentators are saying this is just an accounting trick and no one gets hurt. Just cancel the debt! Others are less sanguine. I really don't know how the market will react when this happens.
Can policymakers convince the public this will just be a one time thing? How much do expectations matter - if at all?