Greece, down the slippery slope

In case you haven't noticed, Greece is slowly going bankrupt. Greek government expenditures far exceed tax revenues. Greek politics will not allow spending cuts or tax hikes. The country is staying afloat by borrowing money.
Couple of questions. First off, who in their right mind would loan money to Greece, no matter how high the interest rate? The chances of Greek default, followed by social and political chaos are serious. The chances of getting your loan paid back are poor.
Well, the lenders are taking out bond insurance, "credit default swaps" is the Wall St code word. The insurers, in return for a juicy fee, guarantee to repay the Greek loans if the Greeks default. Question. Can the insurers pay off when the Greeks default? If not, are they expecting a bailout from Uncle Sam? Are the insurers of sound mind? The chances of default are high, the Wall St Journal financial page has talked of little else for weeks. The other Europeans have made it clear that they won't bail out Greece.
The Obama administration ought to make it perfectly clear to Wall St that any firm issuing, buying, or holding Greek "credit default swaps" will NOT get a bailout. It will be tough on Greece, but it is pretty clear that the Greeks won't clean up their act until they run out of money. It's a poor use of valuable capital to prop up a government that is living far beyond its means.