Reading some of the assumptions and what people 'know' and have read about the causes and fallout of all this is actually fairly funny.

First of all, blame. There are two parties that are responsible for this mess; government and banks. Banks lent irresponsibly, chasing ever more profit, and the governments let them, changing the rules and regulations that enabled the banks to lend ever more and more money. Customers bear very little of the blame. Customers are people and people have always taken whatever the banks are willing to give them. The banks forgot this in their eagerness to make profits. Normal people are not to blame, they are just being what they are and true to their nature. Banks know this, but might be forgiven a little bit (but not much) because they too are following their nature which is to make profit. The government knows this too and are 100% responsible because they are supposed to work in the best interests of the people that voted them into power. The Government (all of em in fact, all as bad as each other)is ultimately responsible for this mess.

ok, now that we've done the blame game, let's move onto something interesting, what the bailout plan is.

Um, nobody knows yet.

That's a huge problem. Paulson went in with no idea more than throw even more money at the banks by buying up the toxic debt. If this had been thought out even a bit in advance it might have gone down better than it initially did, but it got spun out of all proportion and became a burden on taxpayers, etc. Basically it became a political can of worms. It was a massive mistake to ever present it as a 'rescue' of banks. Trust me it wont be. Just look at the latest rescues of banks and you'll see what I mean. Lehman Brothers cut up and sold to the vultures, AIG (ok an insurance company) basically nationalised to get an $85 billion dollar loan, and Washington Mutual sold to JP Morgan for a pittance.

The bailout plan was simply poorly conceived with no thought as to how it would be hijacked through the political process.

Strictly speaking banks don't need money. What they need is security. They need to know they aren't going to have to hold all their capital or raise more to support the falling values and rating of their current debt instruments and other financial holdings. Once the banks know they aren't going to go out of business overnight then things can get moving again. The big question is how is that going to happen. How are the Fed (and other financial centres) going to unfreeze the money markets around the world?

Liquidity injections are not working. We already know that. They've been tried for a while and they do nothing more than allow banks to bolster their balance sheets for a while. Something else then.

How about stopping the housing slump and taking some of the foreclosed properties off of the market?

It's clear the banks aren't going to be lending anything soon so the quick, simple solution is to cut to the heart of the matter. Seize all mortgages that are in delinquency, knock the interest rate down to something small, even zero, but maintain at least a minimum payment of the original capital. As for foreclosed properties, compulsory purchase of all of them over 3 months on the market, via an auction to allow private enterprise and the public to take part too if they wish. Then rent em out.

That's what the bail out plan left out. A plan to help the economy.

Finally, the cost. 700 billion or whatever is actually an insignificant amount. The taxpayer won't notice it. the cost to each taxpayer is around $7000 each. but taxes wont go up much if at all to cover this. Really, teh taxpayer won't notice this much, except for perhaps in the price of goods going up thanks to the weakness of the dollar again due to the fattening of the US deficit.

If a bailout is not forthcoming, then that $7000 that so many people being polled in the streets think they could do a lot with wont go far. Within a year, maybe a lot less, you would see massive unemployment as loads and loads of companies go out of business. That $7000 which you were going to pay in taxes anyway regardless would have kept you in employment, in a home and away from the soup kitchens. Yep, it could get that bad.

But don’t worry. This is not a bailout of banks. This will cost them too. Again, this plan was far too frivolous in its conception. The banks will end up having to pay in warrants - pieces of paper the government can swap for a share in the ownership of whoever issues the warrants (not as bad as AIG’s 80% of the company I hope, that too would end banking as we know it), possibly they will have to pay a tax on their dealings too. This deal will not get through without at least some token punitive deal in ‘favour’ of the taxpayer. However if it is too punitive, the deal simply won’t work and we are all screwed.

Yes, the world will survive a financial meltdown. But really, for the sake of a little tax that you are going to pay regardless, it would be better not to get too close to the edge of the abyss in case the edge gives way.