I can see the reasoning behind that philosophy, of protecting the masses, but on the other hand there is also a perfectly valid "**** it, everybody needs to suffer the consequences of this" .. even if that does mean 20% unemployment, 5 years of depression and big names going bankrupt. All the large countries are doing now is drawing out a long period where recovery could be 10 years away, until all these bad debts, bad loans, bad companies, etc are slowly resolved and replaced with real profits, real efficiency, and real growth. That is the only way to clear the decks for further boom times ahead.
Why should GM continue making cars nobody can afford to buy, that aren't efficient, that aren't what consumers want? Why keep such an inefficiency running as a zombie, when it should have been slayed through the heart long ago?
Why keep broken megabanks with corrupt and greedy individuals afloat? those that overborrowed and over-lent, and if left to fester, so that in 10 years time they can continue to make the same mistakes and cause the next crisis. By bailing these guys out, we are by defacto supporting these very decisions that led to the crisis in the first place.
Even though that situation would be terrible for those concerned, eventually conditions do improve of their own volition, even in the 1930's eventually, yes they did improve. There eventually becomes a point where there is no worse where it can go, everybody who has gone bankrupt has done so, their debts are wiped and you have a 'fresh foundation' to build the whole damn system again. New companies are born, new ways of doing things, new concepts are created, things come along to replace the old ones. These are what create true, sustainable, boom times.
So while there might not be say a GM, who is to say another US car manufacturer could not eventually be created that produces super-efficient cars built on hydrogen fuel cells, electric technology, or others. If there is demand, it will be created by somebody out there, and eventually they take on more staff, they require new suppliers, the country comes out of recession through other such ventures and the cycle continues. If people still want American built cars, something will come along to meet that demand.
But now we're simply building on the foundation of a sewage plant, taking on massive debts that could take a decade or more to clear. And that burden is placed on the workers anyhow, who have to work harder, suffer lower wages, face higher costs and other problems often time. But instead of this being a short, swift period of pain, it's a long one for everybody concerned.
If we do want a state run system, and it seems many do with the "lets not let things fail" then lets give up the fascade of capitalism and lets go towards a centrally run system.. Half nationalised (only as last resort, not by choice!), and half privately run really is a half-baked system which in 5 years time people will be still scratching their heads over what to do about it all.