One of the principal tenets of capitalism is that a business may rise or fall based on its merits. What then does it mean when we say that a business is too big to fail? In the case of a large bank, or, as today, an number or large banks, it means that the number of people who would be severely damaged by that failure is unacceptably large and we, as a nation, must intervene to mitigate the damage.

Intervention raises issues. How to intervene? Who will be protected? Who will get hurt? Who will be rewarded?

One thing is clear. When a business seeks government rescue for it's own folly it has voluntarily surrendered the protective mantra of capitalism. It's owners have failed in the large.

Keep that in mind and read this from Paul Krugman.