Charles posted this over on Pen-l where I read it. Whatever the value of the appraisal, it illustrates, I think, what the establishment or corporate elite are worried about. Sure they worry about losing their money, but I'll bet there is another sort of fear, fear of public exposure of what a fraud the whole game has been. So the Obama team is praying they can save the fraud, and thereby save their own ideological foundations. Indeed, a crisis of confidence. Let's throw money at it, maybe it will go away if we don't ask and don't tell...
CA ---------------
``The U.S. Financial System Is Effectively Insolvent Nouriel Roubini, 03.05.09, 12:01 AM EST There is a grave risk of a global L-shaped depression.
For those who argue that the rate of growth of economic activity is turning positive--that economies are contracting but at a slower rate than in the fourth quarter of 2008--the latest data don't confirm this relative optimism. In 2008's fourth quarter, gross domestic product fell by about 6% in the U.S., 6% in the euro zone, 8% in Germany, 12% in Japan, 16% in Singapore and 20% in South Korea. So things are even more awful in Europe and Asia than in the U.S.
There is, in fact, a rising risk of a global L-shaped depression that would be even worse than the current, painful U-shaped global recession. Here's why:
First, note that most indicators suggest that the second derivative of economic activity [the slope] is still sharply negative in Europe and Japa and close to negative in the U.S. and China....
http://www.forbes.com/2009/03/04/global-recession-insolvent-opinions-columnists-roubini-economy.html
....So for the Treasury to hide behind the "systemic risk" excuse to fork out another $30 billion to AIG is a polite way to say that without such a bailout (and another half-dozen government bailout programs such as TAF, TSLF, PDCF, TARP, TALF and a program that allowed $170 billion of additional debt borrowing by banks and other broker-dealers, with a full government guarantee), Goldman Sachs and every other broker-dealer and major U.S. bank would already be fully insolvent today.
And even with the $2 trillion of government support, most of these financial institutions are insolvent, as delinquency and charge-off rates are now rising at a rate--given the macro outlook--that means expected credit losses for U.S. financial firms will peak at $3.6 trillion. So, in simple words, the U.S. financial system is effectively insolvent.''