Survey says…. $700 billion!

I somehow missed this a few days ago. From Forbes:

In fact, some of the most basic details, including the $700 billion figure Treasury would use to buy up bad debt, are fuzzy.

“It’s not based on any particular data point,” a Treasury spokeswoman told Tuesday. “We just wanted to choose a really large number.”

To be fair, they did have to pick a really large number, and part of the problem in this collapse is that there isn’t good information on the total value of distressed or illiquid assets, or even agreement on how to value them in the first place. The Treasury seems set on overvaluing them as a means to recapitalize the banks (because if the government actually paid market value, the banks wouldn’t get enough new capital to keep them afloat). A lot of economists think this is an atrocious idea unless the government gets equity in return.