Traders work on the floor of the New York Stock Exchange -- March 2, 2009
Traders work on the floor of the New York Stock Exchange -- March 2, 2009 - 
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Bill Radke: Almost 12 years of stock market gains are wiped out, as the Dow lopped off another 300 points yesterday. It closed at just 6,763. This morning, world markets are down again, too.

Andrew Hilton is director of the Center for the Study of Financial Innovation in London. Andrew, what went through your mind yesterday as Wall Street fell away?

Andrew Hilton: Haha, fear I suppose. Fear that there is really no bottom at the present time. That we're being pushed by a sort of irrational desire to sell rather than, we're beyond rational analysis -- we're into an area which is kind of really rather scary.

Radke: So what are world markets looking for?

Hilton: I suppose they're looking for a bright light in the east, and an angel to appear and for them to be told that you know really, God is going to intervene and everything's going to be better. At the moment, short of divine intervention, it's hard to know what's going to stop this.

Radke: Wow, that's our only hope huh?

Hilton: Well, of course that's irrational, but yes, that's our only hope. I'm not looking for any fact, any sort of tangible change which is going to change sentiment. It seems to me that one does need some sort of exogenous and unexpected factor that's going to break this pervasive sense that the markets only have one way to go and that's down. Now it could well be a sudden turnaround in demand for, let's say automobiles or indeed, for housing. And you know, the retail figures have not been as bad as people expected because discounting is starting to have an impact. But that isn't enough by itself yet to do it. But maybe there will come a month where General Motors' sales, instead of being down 46 percent year on year, will actually, you know, be flat or something like that. And there will be a story in The Wall Street Journal or somewhere else which will say, you know, the automobile industry has now bottomed out, and for some reason people will believe it. But, you know, that almost requires divine intervention.

Radke: The Wall Street Journal reports this morning that the Obama administration is considering creating these multiple, privately-run investment funds to buy toxic assets, and the government would contribute money into those funds. Any reaction?

Hilton: Well, if the government is prepared to put enough money into them, obviously, they're a good buy. If the government is not prepared to put a great deal of money into them, private investors will shy away from them. You know, private investors aren't stupid -- if they can get a government subsidy to take these toxic assets off the banks, they'll do it. People can always find a way to make a buck if the government is going to underwrite their losses.

Radke: Sounds like you think the private aspect of this is a bit of a sheen.

Hilton: I think the private aspect is a bit of a con, yeah. I think the government is looking for a private sector fig leaf to cover up what's really a public sector bailout.

Radke: Andrew Hilton, director of the Center for the Study of Financial Innovation. Thank you.

Hilton: My pleasure.