America has got a gun pointed at its head and we don't even know for sure who is pulling the trigger. We shouldn't be talking about a bailout (a Swedish style buyout maybe) because that's a misread of the situation. In reality we're in a hostage situation.
The people with the gun (bankers and foreign lenders for the most part, right) want something from the US. What they want is to clear out our treasury and kneecap America for the next 10 years. This is a play for world dominance at a time when world resources (mainly oil, but also concrete and other things required to run a modern nation) And stupid us, we're going to do just that.
There are two ways to deal with a hostage situation... you can reduce the value of the hostage to zero rendering the situation moot or you can negotiate with the gun holder until you are in a situation of holding power over them and act. I think the latter is unpractical in this situation since it would require a use of force. So the only choice is to reduce the value of what the hostage holds to zero.
A couple examples of how to do that with the present situation:
Housing market - No problem. We'll borrow the depression era Home Owners Mortgage Insurance Program and redo those bad mortgages that we can and erase the others.
Bank to Bank Loans - We'll exchange the value of your non-mortgage related bad debts for equity stake ( a la Sweden ) and impose other rules so that tax payer money does not enrich stock holders or company executives.
Then to get business going again we'll authorize the SBA to start banging out loans to cover payrolls, manage small investments in locally owned businesses, sustainable and green technology, mass transit, and preventative health care. If banks want to get in on the business this creates, they'll start making loans again too.
The end cost might be the same $700 billion, but it won't be a bailout. It will be an economic stimulus package. That's something I think the public can get behind.
Your ideas?