If we let the banks go down should we have let the counter parties go down as well? Should AIG have gone down? While I agree that it would have been better in t

If we let the banks go down should we have let the counter parties go down as well? Should AIG have gone down? While I agree that it would have been better in the long run to let them fail there would have been tremendous consequences to doing so in the short term. If a public pension fund went down with it should it have gotten tax payer money? How about GE? Was the intervention in the short term commercial paper market appropriate? Incidentally this is the one intervention that I still feel was absolutely necessary. While I can hate on the banks as much as the next person there would have been real consequences to letting them fail and I don't think that most people would have gone along with it. If JP Morgan had fallen into bankruptcy and companies (regular ones) that bank there had been unable to make payroll since there cash (and cash convertibles) were frozen there would have been chaos. This started with small interventions like the latin american debt crisis and now that the genie is out of the bottle its not going back in.