Thursday, October 02, 2008

Why buy toxic assets?

Why buy toxic assets to rescue financial firms? Why not just inject capital? Some observers are saying that's the better way to go.

See my story, where I mention John Hussman's take on this issue.

Hussman gives an easy example of some balance sheets, showing the difference between removing toxic assets at a low price, vs. simply injecting the same amount into a troubled firm.