@josh:
I'll try this again.
Do you think anyone other than Detroit is obliged to pay Detroit's debts? Not "wouldn't it be nice if", but actually obliged?
I completely agree with you that "too big to fail" is a severe problem. A purist would not have bailed out GM, AIG, RBS, Fannie, Freddie...
What would have happened in the absence of bailouts is a matter of conjecture, but it could have gotten much uglier than it did.
Reworking the system so that "too big to fail" is met with a snort of derision is (in my mind) a good goal.