[kyboren]

> but I don't see how that's prudent or politically palatable.

It is prudent because it prevents this moral hazard that reduces efficiency and increases systemic risks. Yes, there will be short term turmoil as companies and their operations are restructured. But it is a long-term imperative. Companies must be allowed to die.

It is politically palatable because rich capitalists are getting bailed out with an unlimited backstop while mom n' pop got a measly $1200 one-off payment.

[mindslight]

I agree with where you're coming from, and I don't really want to be arguing against just deserts of bankruptcies.

I'm just saying that looking at the big picture, choosing the catastrophic option is not productive. And so it will never have political buy in (politics is driven by business, not voters), even from businesses that don't need a bailout.

Letting bad behavior continue to occur for long stretches with the idea that there's going to be some eventual reckoning just isn't realistic. Fundamentally, even if a bunch of companies do go bankrupt, the executive compensation won't be clawed back - so the looters still make out. Rather, the bad practices need to be reigned in when they're occurring. And those bad practices run far deeper than the simple technique of stock buybacks.