UK bail-out: It’s the pricing, stupid

The UK Treasury’s latest bank bail-out plan will fail unless it works out what bad assets are worth.

The crisis in the banking sector will only be resolved when the toxic assets that caused the problem are entirely removed from the system. This may be as self-evident as a man in possession of a good fortune being in want of a wife, but governments and regulators alike have spent a lot of time and money trying to convince themselves otherwise.

The latest initiatives announced by the UK Treasury are a step in the right direction in that they propose to start buying assets.

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