It looks like some form of this bailout is going to happen. So here's the way I'd do it if I were running things.
Do to these financial institutions what they did to their customers: loan them the money at high interest rates.
If Paulson and Junior and their cronies, who think a big infusion of money is the solution, are right, the loans will work and the economy will improve and they'll be able to pay back the loans (to us, the taxpayers, via the U. S. treasury).
But if they're wrong and the financial clowns who caused this situation mess up again, then they lose their companies, just like people are losing their homes, and we (us taxpayers, via our government) take over their companies and auction them off to other companies for whatever we can get.
That way we're not out 700 billion, or whatever the final amount is, we're only out what the Wall Street genuises default on, and even that we get back something on, and the successful loans actually pay interest so we make money on them.
I'm no economist, or financial genuis (obviously) but I know how to live within my means, even when I'm broke, as almost every other person I know who makes their living with their "art"—or in day jobs that support their freedom to make their art—does.
Seems like the liberal arts majors once again know more than the business majors. No offense to all you MBAs but, come on, if the U. S. economy was a patient it would have been dead long ago from the malpractice of the money men.
To carry that medical analogy a bit further: if the "doctor" was a true conservative, he'd let the disease run its course and either the patient would recover or die. If neo-conservative, the doctor would let the disease run its course until it looked like the patient really was gonna die and then would infuse the patient with all the medicine it could get its hands on and hope for the best (but only if the patient was a friend, if it was someone the doc didn't know, well, then it would follow the conservative course and let it die).
If the doctor was a liberal, it would use all the latest scientific equipment and medicine, even if the patient then became dependent on that equipment and/or medicine for the rest of its life, better dependent on outside help than dead.