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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,
by _ph_ 7y ago
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.