Reuters reports that bean counters at Goldman Sachs–seconded by New York Senator Chuck Schumer–are now suggesting that it may take $4 trillion to restore the banking system to solvency. It seems like only last week that those estimates were running in the $1 to $2 trillion range–but then again, it was only last week.
You can be sure there’s a pigs-at-the-trough factor in that number as Wall Street and the banking system at large line up to unload their dicey debt. But here’s the kicker: “That money could buy bad assets, which would then be repackaged and sold to investors to raise more money which could then by recycled to buy more assets.”
So banks need to get these debts off their balance sheets because they terrify other banks, and investors, and cause them not to lend money to each other. So the solution is for the government to buy them up and sell them to investors? Who are these investors, and what will cause them to start buying up “assets” that, for some crazy reason, they deem worthless?