Andy Kessler doesn't like Treasury Secretary Henry Paulson's bailout plan because he says government should not own any private enterprise.

Yet, Paulson's plan "seems like a way to end this loan drought," the former hedge fund manager and author wrote in The Wall Street Journal.

According to Kessler, if Treasury pays more than market price for distressed securities, it would look like a taxpayer gift to Wall Street.

"That's politically unfeasible," he says.

So Treasury will buy the securities at the discounted prices even in the wake of the Dow's healthy rebound. Prices on some varieties of bad debt have yet to hit bottom, and some are still in free-fall.

Nevertheless, if Treasury buys debt at going-out-of-business prices, the banks will be required to take massive write-downs.

"Since most of these securities are collateral for other loans, and regulators force banks to have minimum capital requirements and cash on hand, any write-down in value immediately means new capital needs to be raised," Kessler explains.

Who would invest in banks under these seemingly unfavorable conditions?

The answer, says Kessler, is the Treasury, but they'd do it this way: "Treasury injects money into (a) bank's balance sheet, then buys the toxic loans at market prices. Although there may be write-downs, banks will have enough capital to live."

Even untroubled banks which don't need cash infusions, among them Bank of America and JPMorgan Chase, will receive Treasury money anyway. Under Paulson's plan, every major bank will be required to accept "government investment."

By spreading the money around to both troubled and untroubled banks, Paulson makes sure that the weaker banks get loans.

Lawrence Harris, a finance professor at USC and former chief economist at the Securities and Exchange Commission is upbeat about the government's plan.

"Many countries have nationalized their banking systems over the years, then reprivatized them and become very strong. The government will undoubtedly want to get out of the business as quickly as it can. This is certainly not the end of capitalism. Extraordinary problems require extraordinary solutions," Harris told the LA Times.