Well, if that is the market's expectation of what will happen without a bailout plan, it is bad but not that bad.
This is a tough call, one that balances principle vs. pragmatism. I do not like this level of intervention in markets, in particular to the extent that it alleviates the costs to investors and managers who made bad decisions in the past. I think that the incentive impact of any kind of workout/restructuring/"bailout" will linger for a long time and will adversely affect future economic behavior and decisions. On the other hand, I do see a legitimate role for Federal financial authorities to help stabilize, in a liquidity sense, our credit markets. That is not intervention like deciding which form of alternative energy should get funded; it is simply playing a role of nudging markets back to an equilibrium path when they are veering towards a series of essentially bank runs.
I do understand the anger of people and their willingness to accept a fair degree of pain, if it means that we will see clearer financial impacts of all those earlier decisions and given the risk of large taxpayer outlays that could enrich further those who already benefitted.
Interesting times, for sure.