When a country of 320,000 people defaults on their debt it doesn't have significant global consequences. When you start defaulting on debt on behalf of 50, 100, or 150 million people then it starts having very serious consequences on the creditors, on financial markets, and so forth.
I fail to see how a credit writedown for both debtor and creditor suddenly becomes unworkable when it crosses an imaginary population or gross debt line. Plenty of very large companies have undergone debt restructuring and survived to tell the tale. GM was one of the largest companies in the world and the debtors and creditors + equity holders all got wiped out or were given a severe haircut. If the same argument was followed someone would point to a smaller company and say ; well, they are small, it's OK to default. But that big company, no, that's too big.
Nobody pretends that calling an unsustainable and unpayable debt defaulted is a pleasant experience, but it's better to put zombies to the death rather than have them zombie-walking around the economies of the world. If the debt can't be paid back, adding more debt to it is never going to get solved. Anyone who suggested that fixing GM with another set of super-sized loans would have been laughed out of the room - they couldn't make the payments as it was. Yet someone this makes the magic jump from company to country and it's considered sound advice.
Well, not to me.
I'd like to see some explanation as to why this wouldn't work with a larger nation and not simply, because.