So, if you defaulted on your loans, your loans get sent to collections that harrass you until you cough up payment. And who knows whatever else.

When a country is defaulted, i.e. Greece, what happens? Do they get India call centers to harrass the entired Greece population?

Pretty much the same as what is already happening: huge cuts to government spending, tax increases, mass redundancies, economic depression as other countries view trading with them as high risk, and IMF funding to provide essential services.

Creditors recieve little or nothing back on the debts (btw under the CURRENT plan this is also true if you look closely, they got them to agree to large writedowns).

Honestly I don't see much difference between this EU bailout and a default.

What interests me is that Greece had less debt than many of the other EU countries.

OT: Default means nothing happens. You can't pay your debt. It gets written off. What makes it complicated is that they are part of the EU, so there are several benefits that they aren't entitled to any longer.

I'm not the most knowledgeable, but this is a huge issue and no-one responded thus far... I do know that there are some countries that might follow suite soon.

Another interesting point is the effect this will have on the US, since much of that money was lent from there. Interesting times indeed.

A country defaulting is more akin to a bank running out of money than a person defaulting.

A country is financed in several ways, and is kind of like a stock market to use a crude example. Countries invest in treasury bonds because it is a good safe return. For example, other countries may buy US bonds because they know that for every dollar they put in, seven years later they'll get it back in double. The same goes for businesses, and 401ks for company employees, and banks as well.
Now, keep in mind that the United State's economy is propped up by the housing market. When people buy a house, they suddenly have all these new expenditures that really keeps the economy flowing. You need to buy lamps, couches, paint, wallpaper, hire construction workers to open up a wall, fertilizer, tvs, etc etc etc on top of things like property tax, and mortgage.
Now, the banks typically lend money to the home-buyer and in return they earn a good interest rate on it while at the same time supporting the principles of John Nash's economics (the best decisions involve what is best for both the individual and society). This is where the practices of the ARMs (adjustable rate mortgage startups went wrong. They did what's best for themselves at the expense of society and tanked the country).
Banks have two primary ways of making money. Investments in stocks/bonds, and interest from lending.
And in order to decide what kind of risks they are willing to take, they have to keep in mind the relative security of their own investments.
Bank A knows that they have 320million in income this year, some of it from bond maturity. They can afford to lend out a portion of that, and then reinvest the rest in stock and bonds. This then helps them loan out money through which they earn more interest.

On a larger scale, different countries also invest in OTHER country's bond markets because for one reason or another, the return is better. So, say, Greece for example may buy 500m every year in American bonds, and earn a billion back.
A country may also buy it's own bonds as well. What this does is directly inject liquidity into the banks. If US injects 1 B, the banks can immediately start lending around 75% of that, and typically invest the rest. That 750m is lent out, and the funded people use that to buy houses or cars etc etc, and the companies that sold those products then invest those earnings back into the bank, where the bank then loans it out again in diminishing returns.
This can result in 5B in new investments from the original 1B.

It is similar to welfare (which is why I have no idea why people are against it when it's been shown that the gov makes $1.60 for every dollar they put into welfare through a similar diminishing inevestment/return process as above.)

Now, after all that, imagine what happens when said lending country defaults. Suddenly, the banks who thought they had 800m in returns now have 90million, can't afford to loan out any money, now must invest in less ideal bonds with less return in a different country. People with 401ks suddenly have 600k from the 1m they've invested over their lifetime, have to start being more conservative, spending less. Companies make less and invest less, resulting in banks earning less interest and liquidity, etc etc etc


Now, compared to the typical citizen where there is a completely outlined process for default and there are creditors and credit ratings and collections and they can just take your property and sell it.

However, with countries, there is no real international guideline or process. With hundreds of thousands of people having defaulted, there's been room to critically analyze the process and improve it to the point where it's a relatively easy transition.
When this happens to a country, really any country that has invested in said defaulting country, and any company or country who has borrowed from its banks is at risk of the same. If Canada has invested in US bonds, and suddenly they're not getting their return, then this entire process happens again in Canada, though on a smaller scale.

So, what to do?
Well, the only thing a country can do is bail out the defaulting country, otherwise it may lose everything it has invested. If I depend on my 300m in bonds coming in, then I may have to spend 1B protecting that investment and hope that the country is back on its feet firmly so that they can keep paying back my investments as well as paying back my bail out.

This is a simplified version and may be a bit inaccurate, but this is basically how it all works. Keep in mind that experts have written books 600 pages long explaining this process and it is extremely complicated.

Yes, it is the same as that. Welfare recipients tend to buy more expensive products because, hey, it's not their money, so they really help out the mid-tier companies and products. They then pay sales tax, then the company pays income tax, and with making more money, they can hire more workers, who get paid and have tax taken out, and they buy products etc etc etc.

This is on top of the entire effect that I said above about how that company and their workers also have 401k and bond investments, which creates liquidity for banks, who then loan, etc etc etc.

The counter-argument to welfare is that if it wasn't taken out, then people who have better paying jobs could afford to buy more and thus take over the process. However, this argument doesn't take into account market saturation. More money in fewer hands means less of a certain product (like sneakers or chicken), no matter how much you make, you can only consume a certain amount. The counterargument there is that having more money means more kids, meaning more consumers of their own.

However, I only pay like 2-3 percent of my income per week, in these social things so whereas my 10$ would probably just go toward a meal, cumulatively, someone else will receive 700$ and they'll buy a tv.

I'd rather not get into the whole welfare debate though as it is a very controversial subject, and not one I'd interested in having, but the way I see it, it was passed with a huge majority by both sides for a reason, and that is because it is very helpful for an economy. It artificially inflates the middle class, which is necessary for a strong capitalist market.

The difference between the Greek writedown and a "real" default (as yes, technically Greece has defaulted) is that a writedown is negotiated before the fact, similar to those debt-relief services you see on American TV. There's a reason your creditors will agree to essentially cut some of their claims on you if it means saving you from bankruptcy, simply because the creditors then at least know what they're getting, and will get it without a "fight." It's similar to why so many companies will settle lawsuits, even lawsuits that they have a decent shot of winning, rather than take it to court. Bankruptcy or defaults on the part of the debtor create more uncertainty than if you simply say "we'll relieve some of that debt and never lend to you again,"

Essentially, even for completely selfish purposes, the Greek creditors want a solid, scheduled guarantee of how they'll be compensated, rather than the chaotic scramble that results in a disorderly default. Then factor in the fact that a Greek default would be bad for so many different groups of people all over the world, so the creditors were under significant pressure to accept the terms, but likely would have done something similar anyway.

Soleron answered the rest of it. If people think the current situation in Greece means they'll be the European Central Bank's bitch, it would be all the worse for Greece if they defaulted otherwise, as then the country would basically be run by the Central Bank and the IMF and have to do austerity much more severely than they currently do.

As far as I know the Deutsche Bank has given Greece the most credits and is their biggest creditor overall, I don't know if the summed up credits of all american banks sum up to the amount of the Deutsche Bank, another huge Creditor is/was the ÖVAG which is going bancrupt and has to live on support ;P

A lot of countries have gone into a default and greece does so every 120 years ;P Spain was bancrupt 3 times in the 1500s and even the US went bancrupt in 1837.