You mean Credit Default Swaps (CDSes)? [Or perhaps Mortgage Backed Securities?] Outside of the SEC being stupid enough not to regulate these instruments, the government didn't have much to do with over-leveraging of the private sector.
Though the government did give everyone who fucked up a fall from grace rather than what they deserved, which is bankruptcy and the other side of capitalism that our system tends to forget exists when it is convenient.
I understand this feeling and also wish that there was some sort of moral reckoning.
But I feel like the better end state for society is "everyone has access to the same fall from grace that the rich and powerful have" rather than "_everyone_ gets to experience the crushing, arbitrary justice system that those at the bottom rungs of society experience".
In another, they don't care that a country's debt go to zero, they care that the titles they have (used to be paper, today it's all electronic - but they have a maturity date, a face value and some pay interest periodically) get paid. If they sold a new coupon to pay that debt they're paying now is not so important (usually)
But then again if the US or Japan/China/some big EU player defaults in a big way that suddenly becomes the least of your problems.