I've been discussing this with my friend Joe. This is his somewhat leftist (but informed) response to that article:
" That calculation might work for buying mortgages, but the "purpose" (at least the stated one) of the bailout is to get capital flows working again so businesses can finance their operations, inventories, etc. Mortgages and the derivative securities were the driver for a lot of that, and the multiplier effect might put the total dollar amount much higher than $700 billion. The problem is that I'm not sure buying these troubled assets will get capital flowing again.
Mortgages and real estate were the driver for that capital, and even if the government buys up the bad assets, the economy needs another source of capital flows...with a corresponding promise of return on investment...to get things going again. That's where distribution of wealth comes in. When wealth is concentrated in a few hands, those hands can demand a much higher rate of return than if the wealth were spread over many hands. And with the low rates of return available these days, a lot of that capital won't move out of the risk-free instruments it's currently in without massive stimulus. A massive redistribution of that wealth among many more hands, impossible as it may seem, would do a lot more to get capital moving and would spread risk across more sectors...but that's just plain Unamerican
"
He's prolly right that it is not that simple, but still it puts it into perspective.