>If they don't want to deal with the possibility of bankruptcy, they shouldn't lend out money.
Except your pension fund probably lent them money too - how would you like it if you lost your pension because they decide to default ? This is maybe less true in the US but in EU mandatory pension funds are basically proxy for buying government bonds/funding government spending with a hope they will pay out in the future.
I agree theoretically - but the reality is people don't like to see huge defaults - it breaks confidence/trust - and lower trust increases cost/slows down growth and this is not politically acceptable - therefore politicians do everything they can to eliminate corrections and create distortions to preserve confidence.
Except your pension fund probably lent them money too - how would you like it if you lost your pension because they decide to default ? This is maybe less true in the US but in EU mandatory pension funds are basically proxy for buying government bonds/funding government spending with a hope they will pay out in the future.
I agree theoretically - but the reality is people don't like to see huge defaults - it breaks confidence/trust - and lower trust increases cost/slows down growth and this is not politically acceptable - therefore politicians do everything they can to eliminate corrections and create distortions to preserve confidence.