Should governments intervene in a financial crisis to bail out the corporate sector?

Should government’s intervene in times of financial crisis to save the private sector?
The government should have intervened earlier in the financial crisis. Though the government has been monitoring the situation for a while it is their responsibility to take preventive measures so that the financial situation does not worsen. The government is the custodian of a country’s economic environment and so if a need arises it has the right and responsibility to intervene. This does not mean that disciplinary action should not be taken against companies which are found to be at fault.		In my view the government’s job should be to govern and not run businesses. Instead government’s should focus on developmental work like health, education etc and invest in infrastructure, which have a long gestation period such as roads, airports, rail where the private sector would hesitate to invest. Government intervention should be indirect to ensure that the economy is running smoothly, by using monetary and fiscal tools to regulate the economy so that businesses can flourish, people live happily and the policies create enough jobs and wealth.
Is it justified to use tax payer’s money or the government’s treasury to bail out companies which have defaulted due to their greed or lax policies?
Using the tax payer’s money is not justified to bail out companies. Gradually there are cases coming to light wherein big business and banks have been giving big bonuses and incentives to their senior management and CEOs. The legal system should ensure that this money is re-channelised into helping institutions that need financial support. There is surely a lacuna in the system as we have seen the recurrence of such a crisis in 1929, the 1950s and now. It shows that there is a lack of corporate governance and it raises the need to bring in better regulatory systems to monitor things. The fact that a meltdown in one part of the world has a cascading effect worldwide shows the need for an international body which implements and monitors corporate governance standards.		The current situation is something none of us have ever witnessed, and it can definitely be called “an extraordinary situation” as financial institutions do not trust each other. Banks are not trusting their correspondent banks and even to a large extent small retail depositors have lost their trust on the banks and prefer to keep cash at home rather than banks. This situation is going to have a major impact on all the economies, and this will affect businesses world over. So under the current situation, it is very important that governments must intervene directly or indirectly so that confidence in the financial system can be restored and day-to-day business can go on. Otherwise, this is going to be a disaster for the whole world.
Will such bailouts make companies more casual about best practices in future and how can a measure of accountability be brought into the corporate sector?
We need to fix the gaps in the system. While there are exceptions to every rule it should be made clear to companies that authority comes with responsibility and a measure of accountability needs to come in. Due diligence should be done to find out the lacuna in the system and these should be plugged. Questions have also been raised about capitalism as an economic system, there is a feeling that Islamic banks have not been affected by the turmoil. As the world becomes a global village we need to work on an economic system that can withstand such pressures.		Frankly speaking, a well run business should survive and grow if the government policies are business friendly, and a badly managed company will not survive inspite of good government policies because it is badly managed, and do not follow the best corporate governance and ethics. This is what has happened in the United States of America.

 
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