This is not a natural disaster, like an earthquake or tsunami which destroys buildings and productive assets.
And it is not like an epidemic which may kill millions of people. Nor is it like a war, which may do both. For all the red ink, the real productive capacity of the economy may be exactly what it was before. So where does the impoverishment come from?
As long as default and inflation can be held at bay, and the economy can be kept fully employed, which requires monetary policy to be kept supportive for a very long time, then there need be no future real pain as a result of past financial mistakes. Admittedly, achieving this result will require some immediate announcement of tough public expenditure control.