Web Trader MT5
Government rescue of a failing institution, industry, or country. Sometimes cash; sometimes loan guarantees; sometimes equity injections; sometimes just the central bank promising to be the buyer of last resort if nothing else works.
The justification is always the same: this entity is too important to fail. Letting it collapse would set off contagion, kill jobs, freeze credit. Critics counter that bailouts breed moral hazard. If you know you’ll be saved, you take more risk. Both positions are correct, which is part of why bailout politics never settle cleanly.
The 2008 crisis is the reference event. The Bush and Obama administrations bailed out banks, insurers, and carmakers within an 18-month span, using a combination of TARP funds, Federal Reserve facilities, and direct equity stakes. Most were repaid with profit. The political damage lasted longer than the financial damage.
Example: AIG received roughly $182 billion across 2008-09, after its London-based credit-default-swap book imploded. The US government got 79.9% of the company in exchange. AIG eventually repaid every dollar. But very few voters remember that.
