Public money was used in the US, to shore up retail banking so that people’s life savings weren’t wiped out by their bank going broke. No public money was used to bail out investment houses (see Lehman Brothers etc).
In the US, U.K. and Europe, the rules were changed to separate the retail banking and investment banking arms of banks so that a future 2008 would mean that investment banks could go to the wall and it wouldn’t affect people with savings accounts which was a good and much needed change.
Melvin Capital et al are not retail banks. If it goes into bankruptcy then only people with money held by Melvin Capital lose out (they would generally be high net worth, experienced investors anyway as you don’t put your retirement funds into a hedge fund if you’re risk averse).
What I can see the US Govt and SEC doing in the non too distant is putting a limit on the percentage of float that can be shorted. GME being shorted to 140% of available stock was absolutely fucking moronic and they’re paying the price. They won’t get a cent of tax dollars.
FWIW, there isn’t a ‘bubble’ here so to speak. It’s a Short Squeeze on those that shorted one stock and it is, as yet, no where near as big as the one on VW in the 2000’s that cost some hedge funds billions. Again, none were bailed out.
