re: Should companies or gov limit buybacks in the future

I would agree that debt-funded buybacks to increase share price for executive compensation targets is a bit distasteful, but the supervisory board should control this.

How much cash should businesses hold in a "Rany day fund" to prepare for this event?

When flush with cash, companies have several choices of what to do with it.
* Pay down existing debt.
* Capital investment for additional capacity / growth.
* R&D for innovation or future growth.
* M&A for growth or expansion into new markets.
* Invest in existing assets for improved reliability and quality.
* Invest in existing employees to improve capabilities, quality, retention.
* Dividends to reward investors.
* Share buybacks to reward investors (or deter takeovers).
* Hold for rainy day or to reduce reliance on debt.

All of these are valid uses for cash, and every company will make decisions based on their market, maturity, strategy, etc.