Shame is not the word I'd argue is important here, even if it is a factor. But reputation matters. With governments, it's a lot about the credibility. You coul

Shame is not the word I'd argue is important here, even if it is a factor. But reputation matters. With governments, it's a lot about the credibility. You could say that it was wise economically for e.g. Argentina to default on its loans in 2001 given the circumstances; however, the default and the associated political rhetoric have cost a great deal to the Argentinian government and people, and it continues its decline, although it was a very wealthy country 80 years ago and effectively avoided the Second World War. The economic and political institutions in the country are not trusted. I live in Finland, which in 1918 suffered a famine after a bloody civil war. The new government took a loan from U.S. creditors in 1919 to buy food. Many other countries who took similar loans at the same time defaulted them at the Great Depression or the following years in 1930's. Economically, that would have made a lot of sense. But the Finnish government kept paying it back, even during the beginning of World War II while being attacked by U.S.S.R. This gained a huge positive reputation which helped the country a lot. After the war, the old loan was eventually converted to a fund whose payments were given as university grants and stipends to students coming from Finland to U.S. universities. It would have been quite easy to default in 1920's or latest in 1940, and most modern economists would have advised for it, but not doing that was a good move. The loan was eventually finished back in 1984, but the process attracted donors who gave further funding so that the stipend/grant system still exists.