The UK government will spend over $87 billion to buy preferred shares in many of the nation's largest banks. The government will also guarantee certain bonds sold by the financial firms. The move amounts to a partial nationalization of the banking system.

According to The Wall Street Journal, "The Treasury also said the Bank of England will make "at least" £200 billion in funds available to the banks through its Special Liquidity Scheme. The scheme was established in April, and allows banks to swap illiquid assets such as mortgage-backed securities for Treasury bills, which they can use to raise money."

The news indicates what a desperate and dark hour the financial industry has fallen into and begs the question of whether the US Treasury will do the same thing. Yesterday, Bank of America (NYSE: BAC) had trouble selling $10 billion in new shares and its stock dropped almost 30%. Shares in Morgan Stanley (NYSE: MS) fell almost 40% on concerns that Mitsubishi UFJ would not complete its purchase of shares in the investment bank.

A direct US investment in large banks could cost much more than in the UK because of the size of the banks here. To mount a similar program could cost the Treasury $300 or $400 billion. If the markets keep falling, it may be necessary. With Treasury already committed to $700 billion for a bailout and the Fed loaning hundreds of billions at its emergency financing window, what is another $400 billion.

The US government may just keep pushing until it is out of cash.

Douglas A. McIntyre is an editor at 247wallst.com.