This article from the Technology-Commerce-Society blog, aptly titled Avoiding National Suicide Out of Schadenfreude, explains nicely why we need the bail-out. I'll let you read the article, as it's pretty well written and very informative (and way over my head on many of the specific Wall Street factoids). But the highlight for me was this analogy:
[Not bailing out Wall Street] is a bit like protesting against patching the hole in an ocean liner because doing so will save those who made the crucial navigational errors. Watching the navigator sink beneath the waves might be fun, but one's pleasure will be short and gurgly.Amen. We can't afford another Great Depression, especially since many more Americans are hip-deep in unsecured credit card debt than were so in 1929. But it's important that Democrats understand that this time, they need to take it to the wire. No strings attached legislation that hands hundreds of billions of dollars to one guy with no accountability just isn't going to work for us, and our Congress needs to stand strong to retain its backbone, so we don't end up with the financial version of the Patriot Act.