One thing I'm somewhat confused about is why a bailout is better than default. In both cases the banks cannot pay back loans so their credit is worthless right? In a bailout the government becomes the bank (through a proxy) but its still the governments credit, not the banks'. So keeping the banks alive, instead of allowing them to default would keep jobs, but wouldn't it be keeping the jobs of people who, for lack of a better term, didn't actually do their job?