by David Chaproniere

Created on: September 30, 2008   Last Updated: August 03, 2009

I vote yes rather tentatively. If the question alludes to governments of other countries, the answer would be a clear "no". But in our globalised commercial world, it is not just governments who should bail out bad business.

The collapse of Lehman Brothers is a case in point. For a chunk of the New York arm of the business, Britain's Barclays has come to the rescue, at least so far as jobs and continuation of business are concerned. Hence, a foreign business has snapped up part of a bankrupt US firm, and has saved a number of jobs and salvaged a small part of the US economy in the process.

But it is not just the US banking sector that is at threat right now - banks across the globe are under threat, and the whole market is repositioning itself through bankruptcy, nationalisation and takeover. Thus, in Britain, HBOS has been taken over by Lloyds TSB, effectively creating a "superbank" and generating concerns of less competition and consumer choice; Japanese bank Nomura has been looking into purchasing the UK arm of Lehman after snapping up Lehman's Asia businesses; Spain's Santander is buying up a portion of what will largely be an otherwise nationalised Bradford and Bingley; and all this after Northern Rock, which started the banking crisis in the UK, was nationalised to stem a major run on the bank - the first in over a century.

It is perhaps difficult for Americans, so great is the crisis in the States and with $700bn of taxpayers' money at stake, to see that the knock-on effect is already impacting on economies worldwide and that bail-outs are happening everywhere, by governments part or wholly nationalising banks, by less-affected national banks taking over failing banks' assets in their own countries, and by international finance houses snapping up bargains wherever they can be had.

Governments' role is to ensure that their respective countries and their citizens are safeguarded in any eventuality, whatever the circumstances, and this they must do with an eye on what is happening outside their borders. But for any government, the interests of its country and voters are tantamount, irrespective of what is happening abroad. If the UK government were to turn to the US government and demand bail-outs for UK firms on the basis that it was the US that first came up with the idea of subprime mortgages, I can guess what the answer would be, and it certainly would not be "Of course - how much do you need?" In the current turmoil, governments have enough difficulty controlling their own economies, without the burden of bailing out other countries' failing economies, too.

In a capitalist society, one would expect the business sector to deal with its own crises, mishaps and outright incompetence so far as it can. Governments should step in only as a last resort.

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