If the Government did nothing, it would result in higher unemployment. So it's that age old economic question when it comes down to inflation vs employment, you have to make the decision, would you rather have more people in work, or have the people who are in work have their real incomes go down.
I suppose it's really about finding the right balance, which is what I think the British Government has been quite successful in achieving - bailing out some firms, allowing mergers for others, and allowing some to go into administration. Of course, there's a human cost in all of this.
I don't know on what terms the money has been handed out to the firms out in the states, but in the UK all Government bailouts are in exchange for some level of control over the firm and how the money is spent, and the money must be paid back - which some firms have started doing. This will mean that the Government will be able to recuperate most of the bailouts without turning to the tax payer (unlike what the Conservatives are trying to get people to believe).
Many have criticised Darling-Brown for their policies here in the UK, but it's looking more and more likely that we're going to see economic growth this quarter, and the Pound is starting to slowly climb back up against the Euro/Dollar, again. We're not out of the woods, yet, but things are certainly on the up, at least.
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