From Richard Posner.  This is really quite lucid, and his final proposal is closer to what many other economists (e.g., Krugman) have proposed.

UPDATE:  Jeffrey Gordon (Columbia Law School) writes:

I think Posner’s approach of directly infusing capital into the troubled institutions (which others have suggested as well) is no better than the current proposal because both mechanisms face difficult questions of how to price the government’s equity share and the bad securities.   Let’s assume under the bailout  the goverment pays "hold to maturity" value of 70 cents on the dollar,  more than current market value (assume 40 cents on the dollar), in the effort to inject capital. Under the bailout bill, the government will get not only the toxic securities but also warrants to buy stock in the selling institution.  So if the government were to recapitalize an institution through paying "too high" a price, it can recoup through its share of the firm’s equity.    Posner and others would recapitalize the firms directly — but how much would the firm need (which involves an estimate of the value of the toxic securities) and how much would the government receive?  (Buffett got preferred shares and warrants in Goldman Sachs — and because Goldman has few of these difficult to price assets on its books, the parties didn’t face critical valuation issues.)    It’s ultimately the same set of valuation issues, and the purchase of the toxic securities divides the "bad bank" assets from the "good bank" assets, a classic move by the FDIC and others in bank bailouts. As I see it, the critical issue is the speed of implementation.  The sooner the better.   

Relatedly, I am quite unhappy about the letter sent by U Chi economists opposing the present bailout bill.  On the one side are 400 economists — none of whom shouted alarms that I can recall  about  the systemic risks of the burgeoning credit derivatives market — who oppose the bailout bill.  On the other is Warren Buffet, who foresaw that risk ("weapons of financial mass destruction"), who supports the bill.  You make the call.