more about toxic assets

I just saw this article on the Globe and Mail's website:

http://business.theglobeandmail.com/servlet/story/RTGAM.20090204.wbanks_obama05/BNStory/crashandrecovery/home?cid=al_gam_mostview

It repeats most of the nonsense surrounding this issue. For instance, this is repeated without challenge:

"The ultimate goal is to get the major banks lending again, by relieving them of their bad assets and shoring up their balance sheets."

This article also talks about a "Bad Bank", where all of the bad assets can be placed, at considerable taxpayer expense (several trillion dollars). There has been a lot of talk of this recently. A bad bank has been part of other successful bank bailouts, but in those cases the other banks were nationalized. The shareholders lost everything. Not doing that will just give a lot of money to current bank shareholders, at taypayer expense.

Worst of all, it probably won't even solve the problem.



Here's a Paul Krugman post on why this is stupid:

http://krugman.blogs.nytimes.com/2009/01/18/more-on-the-bad-bank/