"Warren Buffett thinks the appropriate price would be the "market value," which he believes is below the price at which the banks are currently carrying their trash:
[If] they do [the bailout] right, I think they'll make a lot of money…. They shouldn't buy these debt instruments at what the institutions paid.  They shouldn't buy them at what they're carrying, what the carrying value is, necessarily.  They should buy them at the kind of prices that are available in the market. People who are buying these instruments in the market are expecting to make 15 to 20 percent on those instruments.  If the government makes anything over its cost of borrowing, this deal will come out with a profit.  And I would bet it will come out with a profit, actually…"
The goverment should not pay a fictional price, they should pay the much lower real market value – and they do not have to save every bank in the nation. 

Posted by email from ivanandersson’s posterous