Where do you draw the line for a bailout? I guess it would be for when it will severely effect the economy. How is that determined?

That's the trillion-dollar question right now.  There are positions ranging from no bailout to bail out everything.  The answer depends both on your preferred economic system and how far into the future you want to look.  Capitalist economies are cyclical, so few economists have any doubt that the U.S. economy will eventually recover.  (Admittedly, it may no longer be the best in the world, and it may not recover 100%.  Then again, it could rebound higher once the market is stable again.)  If you look mainly 10 years ahead and you want to rebuild the structure of the economy for increased security, then you're probably less interested in bailouts because theoretically the companies that are better-managed and run the right way will stand, and the rest will be weeded out.  If you're looking at current job losses and low consumer confidence, then you want lots of bailouts because they stimulate the economy rapidly but don't encourage change as quickly.

Ironically, the general public is against the idea of bailouts, and yet they are the ones who would most directly benefit from them in the short term.  They're against bailouts because the media paints them as a waste of taxpayer money and the government hasn't done anything to assay that fear.  In fact, with very little oversight of the $700 billion, that fear may be well founded, albeit misplaced since $700B is relatively little in terms of total government debt and spending.

FWIW, Obama is pro-bailout.  He wants to give the people relief from their current plight, and believes that he can take more time with long-term restructuring.  That's probably a good approach, assuming that bailouts actually work and get paid back.

Does that make sense?

that makes sense i guess

the media definitely doesnt put it like that

I agree with you the money should be extremely well manged. What did our stimulus package accomplish? Nothing really as far as I know.

It kept some large financial firms and banks from failing by giving them loans and buying bad debt.  That took about a third of the money; more will be needed for similar actions; and we have to figure out what to do with the rest.  The issues at hand are primarily whether to assist homeowners with mortgages and whether to bail out the auto industry, although there are other possibilities as well.

Here's what's going on right now: Congress thinks that if they give the Big 3 the money they asked for, they'll just throw it down the tube like they have in the past.  So, they're asking automakers to submit a plan for how they can use the money to save their companies.  If that plan is in by December 2, then Congress will return to session in the week of December 8 to debate what they're willing to give.

*cough* oversight *cough*

...People in Ohio apparently feel the same way:

Some also think bankruptcy is a solution since it will allow faster restructuring, but auto company administrations disagree.

I agree, while it is debatebly necessary that we need to do this, this really can not keep happening.  Companies fail because they are not doing their job right. Another company will and take their buisness.

yes -- that seems obvious to me.  the problem is these big companies are responsible for like an eighth of american industry so if they fail we all go down with them.  people say it will get better eventually but wed rather not have the crisis last as long.

I think congress is doing the right thing for once