Yeah, I think you have missed one of the threads in the public debate. Basically, what people want to pay for this stuff is less than the holders have it written down as being worth, so unless they write down even more than they already have, they don't want to sell at the prices people want to buy at. It's not a lack of willing buyers that's the problem, it's a lack of belief in the value of these things, and the fact that their holders still have them on the books as worth more than buyers are willing to pay.
That's actually one of the most common criticisms of Paulson's public remarks on the bailout: He says the government would buy "at fair market value" and lots of people are pointing out that he must mean "well above market value", otherwise there'd be no point: there are already willing buyers, and "market value" is what those buyers are willing to pay, and if we could solve the mess by having all the banks sell at those prices, there's no need for the government to buy any of it.
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momijizukamori
no subject
Date: 2008-09-23 18:43 (UTC)That's actually one of the most common criticisms of Paulson's public remarks on the bailout: He says the government would buy "at fair market value" and lots of people are pointing out that he must mean "well above market value", otherwise there'd be no point: there are already willing buyers, and "market value" is what those buyers are willing to pay, and if we could solve the mess by having all the banks sell at those prices, there's no need for the government to buy any of it.