That said, it's good timing on the announcement because it's more a signal than anything.
'We will not hesitate' is pretty strong language, indicating faith in those institutions that are, at least for now 'too big to fail'.
That's the general idea, yeah, "buy low sell high".
There's no reason failing companies should receive "bailouts" - defined as government-granted low-interest loans, often without suitable collateral. If the government puts in money, it should receive shares.
In Europe, since the revolutions, the primary marker of crony isn't so much birth, it's education, i.e. Oxbridge/Grande Ecole etc., but once they're through that 'kind of egalitarian' gamut of education, it's mostly 'crony' from there on in.
This has a kind of nationalist/communitarian aspect which can be helpful in times such as this (cronie CEO is buddies with cronie Minister of Finance), but it's generally not good for competition and global competitiveness.
It feels something is terribly wrong with the world and the basic laws of capitalism, now that it turns out many companies don't pile on stuff, and go out of business in a matter of weeks when supply is lagging behind.
Are there any examples of companies using "we can pay our employees for six months" as a competitive advantage on Wall Street you can point to? Industry self-regulation in this regard has a pretty dismal track record.
What if nobody is willing to invest in an insane business? Then they will all have more difficulty accessing capital than sane businesses.
Unless some completely new regulations are passed, nothing will change about the basic incentive structures of markets. And these incentive structures are more powerful than whatever an investor or a CEO may feel.
A related concept is the so-called "normalization of deviance".
But this is the basic law of free markets at work. If you can run on a leaner supply chain, you'll outcompete those that can't. It's regular market competition that makes systems extremely fragile - all redundancy is considered as waste, fat to be cut off.
I absolutely agree with your comment, but that's exactly what the original poster was referring to, I think, with "something is terribly wrong with [...] the basic laws of capitalism", one being the free market, as you just mentioned.
40 years ago it was illegal in the US to pile on debt and use that money for stock buybacks. Which frankly is reasonable as looting struggling companies is bad for the economy and arguably fraud.
Having cash on hand is leaving money on the table - you could put it to use in something that makes you grow, or lose to a competitor that does. It's a different thing than lean manufacturing, but same forces cause both.
Expansion seems like an obvious solution, but in a competitive market that’s not always a winning strategy. Read up on the rise and fall of Subway to see the issues.