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I don't know the exact scenario in Croatia or Brazil; In general, writing off loans sets a bad precedent. People would again take loans, and will want the Govt. to bail them out. I have seen these things happen in India. There were cases people took loans and were waiting for the next election, to get their loans waived off.

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How is it that this logic is lost when it comes to cities and corporations that declare bankruptcy? While Detroit may spend a few years having trouble getting good loans I imagine GM (bailed out some years ago) is already able to claim low interest loans. And these are entities that were also bailed out.

I think you answered your own question didn't you? Those companies were 'bailed out'. The government didn't just wipe out their debts by fiat; it gave them money.

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