[notahacker]

Bryan Caplan's 'Why I Am Not An Austrian Economist' is a pretty definitive take on the weaknesses of the school's main arguments (from someone based at the only faculty to seriously focus on Austrian Economics who is broadly sympathetic to the school politically and sceptical of much of mainstream economics). http://econfaculty.gmu.edu/bcaplan/whyaust.htm

What happened in 1971 was that the remnant gold standard system embodied in Bretton Woods proved to be entirely inadequate to changing economic circumstances. Despite the Gold Standard's almost religious significance to certain economists of Austrian stripes, many of the other economic changes over the last half century were driven far more by abandonment of policies Austrian economists generally hate [large scale public investment projects, collective bargaining] and embrace of policies they love [deregulation, flattening of the tax system]. There's a reason that the incomes of the "1%" actually start growing rapidly again in the 1980s and not the 1970s, for example.

As for why the current set of broken companies should be bailed out, it's quite difficult to argue either ethically that businesses ought to bear the financial responsibility for being ordered to stop trading for health reasons, or in terms of economic substainability that the public will be better off starting everything from scratch if and when anyone feels like starting things like air transport again.