How will the gov't be able to buy up these toxic assets if it's almost impossible to set a price for them?
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989 points
rvilmur answered 8 months ago …
The government needs to bid for specific items. That sets a floor on the price. The government needs to start with a low bid and if no takers, slowly raise the bid until some holder hits the bid because it needs the cash and can't wait for a higher bid. Once some of the assets are bought other private entities like hedge funds will probably start to participate. There are always prices which will cause trading to begin; you just have to start the search for the price at which the auction market starts to work.
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2082 points
alanj answered 8 months ago …
They will be bought at an auction. This will determine what price they are worth. As rvilmur says, they will start the bidding at a low price and then start raising the price until they find someone (or in this case a financial institution) who will sell at that price. And it will go from there. Just like you normally would at any auction.
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