Jonathan Weil of Bloomberg has an eye-opening column about the need to inject capital into the system, rather than just buy up dud assets, as the bailout plan has proposed. What’s especially enlightening is he presents the $700 billion figure in a context I haven’t seen:

For that much money, at yesterday’s prices, the government could buy 23 of the 24 banks in the KBW Bank Index, including Bank of America Corp. and Wells Fargo & Co. And it still would have money left to buy a stake in JPMorgan Chase & Co., the largest company in the index.

Wowzas!

Weil says the European takeover of Fortis this weekend, which gave taxpayers a nearly 50% stake in the company, is how the bailout should work:

That’s how a government intervention is supposed to work. The company gets fresh capital, which has the added benefit of not being fake. The buyers get equity. Legacy shareholders get slammed with dilution. And if the company recovers, the government can sell shares to the public later, maybe even at a profit.

And he makes another sound proposal:

As for the illiquid assets still on banks’ balance sheets, the best way to find out what they’re worth is to start disclosing every conceivable piece of data about them, right down to the daily cash flows they produce. A big reason subprime mortgage-related securities aren’t selling is that outsiders can’t see what’s underlying them on a timely basis.

Martin Wolf of the FT—one of the smartest commentators around, says Congress is risking another Great Depression by rejecting a bailout, however deeply flawed it is.

We are watching the disintegration of the financial system. Finance is the web of intermediation binding economic agents to one another, across both space and time. Without it, no modern economy can survive. Yet that is now threatened, with the ongoing collapse in trust and flight to safety. We can indeed run this experiment. But why should we?

Speaking of Great Depressions, David Leonhardt of the NYT provides some economic history, which I don’t think we can get enough of right now.

… the basic mechanics of how the economy might fall into a severe recession look quite similar to those that caused the Depression. In both cases, a credit crisis is at the center of the story.

At the start of the 1930s, despite everything that had happened on Wall Street, the American economy had not yet collapsed. Consumer spending and business investment were down, but not horribly so.

In late 1930, however, a rolling series of bank panics began. Investments made by the banks were going bad — or, in some cases, were rumored to be going bad — and nervous customers besieged bank branches to demand their money back. Hundreds of banks eventually closed.

Once a bank in a given town shut its doors, all the knowledge accumulated by the bank officers there effectively disappeared. Other banks weren’t nearly as willing to lend money to local businesses and residents because the loan officers at those banks didn’t know which borrowers were less reliable than they looked. Credit dried up.

It’s funny but pathetic to see the think-tank folks on the right flail around trying to blame government somehow—anyhow!mdash;for the failures of their free-market ideology. Here’s a column in the Washington Times that blames Fannie and Freddie, who I’ll be the first to say were not upright entities, for the collapse.

It is universally understood that the present financial meltdown began with the problems of two enormous government-sponsored enterprises (GSEs) — Fannie Mae and Freddie Mac.

Universally, huh? Here’s Justin Fox at Time with a relevant chart and other info:

And on the left, Thomas Frank in today’s Journal writes about this very campaign and blisters the conservative talking points:

When some free-market scheme blows up, one needs only find an institution of government in close proximity to the wreckage and commence accusing…

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.