John Mauldin explains in easy to understand language why this bailout is required. In great detail he expands on my comment yesterday; I think $700 billion may look like a steal or a pipe dream in the months to come.
John discusses the size of the subprime problem “Over $500 billion has been written off so far, with credible estimates that there might be another $500 billion to go”
Remarkably that view is still in line with S&P’s April prediction I commented on a few days ago. -> Excellent prediction from …

$340 billion in delinquencies requires $700 billion bail-out. Will the wonders of accounting ever cease?
“Alt-A mortgage backed securities is smaller — about $US600 billion for loans made between 2005 and 2007, compared with about $US1000 billion for sub-prime.” London Financial Times reported in The Australian
Percentage of Loan defaults from NY Times

Form those two sources I conclude:

12%-27% of subprime in default or $120- $270 billion
6% - 12% of Alt-A are in default or $36 - $72 billion

Even if I take the highest numbers ($270B+$72B) I still get a $360B …