Bailout takes a 90 degree turn

[highnote]

Looks like the 700 billion won't be used to buy up toxic assets afterall. Instead, it will be used to inject liquidity into the banking system. I don't know all the details, but opinion seems to be that an injection is a much better way to stem the tide.

Paulson should be lucky that his early opposition to such public capital injection in the financial system did not prevent Congress – via the back door – to do what was right. And he is now lucky that the first thing he could mention and did mention in his press conference yesterday was a plan to “inject capital into financial institutions” rather than the half-baked idea of spending most of the $700 bn to buy toxic assets. -- Nouriel Rubini of RGEMonitor.com

[highnote]

Surprised this is not bigger news yet. There was a huge uproard about the bailout money being used to buy crap assets to prop up the banks. Now that the Treasury dept has changed directions I'm not hearing much about it.

[robert99]

The liquidity injection will need far more than the $700B that Congress approved so it may be that they can spend some of the approved $700B quickly on liquidity then come back for Congress to approve even more for the toxic assets stage - which I believe is not set up yet. It now looks far cheaper and more effective to to let the banks fail - then nationalise the shells and run the nationalised banks solely in the nation's interest for a couple of years.

[ddog]

always the best option, the bail,cash injections into an unknown black hole is only prolonging the problems.

many banks,entities are and have been insolvent for a long time.
why would anyone have confidence in that?

ther have already been trillions shoveled out and that is wasted effort.