Contrary to what I wrote earlier, a bailout is looking like an inferior option, when compared to the prospect of investors doing a Warren Buffett and stabilizing banks themselves. The case for government intervention presupposes, to my mind, that there really is no alternative, and it doesn't look like that's really true.
UPDATE 10:05AM: The WSJ disagrees. From today's editorial: "Public capital will be needed to refinance the banking system, whether through the FDIC or some other mechanism. Anyone who thinks otherwise doesn't understand the extent of the problem." On the third hand, here's Allan Meltzer from last night's News Hour: "The market people caused this problem. They ought to be the ones that pay the cost of having it cleaned up." (Via Mankiw.) It's been a long time since free-market types were so divided on a major economic issue.
UPDATE 1:00 PM: Buffett calls the crisis an "economic Pearl Harbor" and supports the Paulson plan. He says: "I am betting on Congress doing the right thing for the American public and passing this bill." Interesting, though I wonder if he would have made this investment if he thought it actually would be a bad one in the event no bailout gets passed.