> When /etc/network/interfaces is available, some other program, not under
> upstart control, brings lo up, and everything seems to work.

No, it's brought up by /etc/init/network-interface.conf.

> When no /etc/network/interfaces is available, It seems that upstart is
> waiting for lo to be brought up before starting services; however network
> manager, responsible for bringing up lo is not started by upstart; creating 
> the
> circular dependency.

NetworkManager is not responsible for lo; it just happens to bring it
up, in some circumstances, if nothing else has done so.  However, it
brings it up in a way that bypasses ifupdown (and therefore /etc/network
/if-up.d/upstart), so the net-device-up event is never generated.

-- 
upstart not starting init-scripts (event net-device-up IFACE=lo missing)
https://bugs.launchpad.net/bugs/497299
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