If we are giving up free market purism for the duration of the crisis maybe we could at least set rules for bail-outs. These are absolutely necessary. Markets abhor uncertainty, and the ad hocery we have had in the last several months pumps up the uncertainty. It is part of what is killing us -- this one gets rescued on easy terms, this one survives but its shareholders are snuffed, that one is allowed to go under. The sane investor looks at this and says, "I'm out of here."
So Bail-outs should only be considered if:
(1) industry impairment is likely to cause a systemic failure for the economy as a whole.
or
(2) the employment impact of the industry's collapse are unacceptably high.
The financial industry qualifies under (1) -- without a financial system, ATMs have no money, checks don't clear, and we are in the stone age.
The auto industry qualifies under (2) -- not only scores of thousands of Detroit Three employees are wiped out, but also millions more working for the transplants, the dealers, the suppliers who make thousands of the parts that go into vehicles, and in all kinds of jobs in towns across the country where car and parts factories operate.
The snowboard industry does not qualify.
The commercial real estate industry does not qualify.
Larry Flynt and the porn industry do not qualify. The Detroit Lions do not qualify. The City of Philadelphia does not qualify.
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