The bailout of Bear Stearns was a mere appetizer to the cliff we’re falling over now.
Market theory would tell us the government should not intervene–these institutions should be allowed to fail, the unwise investments allowed to collapse and the money to be lost. At the last height of Laissez-faire economic policy, in the 1920’s, that was the plan. The institutions were allowed to collapse one-by-one, causing the Great Depression.
That didn’t work out so well. In the 1930’s, sifting through the rubble of the US economy, the next plan was regulation.
We’re now left in the worst situation: Propping up failing deregulated markets with taxpayer dollars.