Joel Get Off the Babysitter
Stephen Bainbridge offers the best defense I've seen for the Wall Street Bailout:
Too big to fail is bad public policy. But I’m persuaded that the very real prospect of too many to fail presents an entirely different question. We are faced with a situation in which a systemic credit freeze will take down not just one or two banks, but many, including not just Wall Street but also local and regional banks. In turn, as more banks fail, it will become increasingly difficult for non-financial businesses to borrow. The ripple effect could be disastrous.
There's also this uncomfortable little fact: Free markets didn't get us into this mess, and so it seems unlikely that they'd react quickly enough to get us out of it. Especially given the political climate of the last, oh, century. Washington and markets have been in bed together since at least the time of Teddy Roosevelt.
And the offspring have turned out even uglier than predicted.