This is a difficult call to make. Of course, the government shouldn't be the automatic fall-back solution for incompetent/greedy management. On the other side, large companies failing do have a network effect, that is why the government does bailouts in the first place. There are arguments that the 2008 crisis could have been avoided, if the government had bailed out Lehman. Lehman failing caused the crisis and in the end many more companies needed and got a bail out and still a huge economic damage was done.
The only solution in my eyes for this dilemma is, that the government should do bail outs, but at the price of shares. For any money paid, which isn't just credits, the government should get company shares, which are sold off, as soon as the market stabilizes.
Agreed. Or an additional option is to let businesses fail. The value of a viable business doesn't instantly go away just because they are insolvent. Let another better managed company buy up the failed company.
no. the government merely needs to look like it will be a tough debate next time that might not go through, by having a tough debate this time that spooks businesses