Why stimulus packages fail?

Since 1929, Governments have had one policy for tackling recessions - commonly known as 'anti-depression' arsenal of government policy. Those have been

1) Prevent or delay liquidation

2) Inflate the economy in a period of decreasing rising artificially

3) Keep wages high

4) Stimulate consumption and alter savings

With the probability of defaltion high in the current scenario, governments are trying their best to avoid a credit contraction. 

However, as it is known, every boom comes with a set of evils that is corrected in a bust. The same is seen in the current scenario. The excessive lending and leveraging was the evil that is now getting corrected across businesses and industries. 

The longer the boom, the sharper the bust is. 

In fact, deflation is the best cure in the current scenario as it would bring prices to the corrected level that would help spur the economy again.

With the government aids to the "too big to fail" institutions, the depression is only getting prolonged. Organizations like GM that are not being managed effectively have to let to fall. 

Government should maintain the system of laizzez faire, let the market correct itself and take the role of a regulator.

What the government can do is to set up a system of effective governance to keep regulations in place and avoid cases like Satyam emerging in the economy.