Here is what I would do: 1 Eliminate the M2M accounting rule so banks can realize a higher value for their loans and distressed assets. 2 Create a clearinghouse for CDS products with strict margin requirements. No derivatives contract should ever trade without being regulated by an exchange/clearinghouse. 3 Lower fed funds rate to 0 and then raise by 25 bps each month until it reaches 10%. 4 If any bank is in trouble I would offer a loanshark loan of 15% interest that is convertible to senior perferred stock at $1/share if not paid on time. This whole "give me $700 billion and crown me king" Paulson/Bernanke proposal is simply treason.
Suggest you link to: http://globaleconomicanalysis.blogspot.com/ and then consider supporting Roubini's HOME proposal http://www.rgemonitor.com/blog/roubini/ for the simple reason that he's been ahead of this thing for a long time and has had the longest to consider how to right it. I have no idea what should be done personally - It feels to me as if something has gone terribly, terribly wrong.