On Sep 29, 2008, at 1:18 PM, raghu wrote:
re: liquidity, Paulson and his friends seem to have a difficult time accepting the idea that toxic mortgage assets may actually be toxic. They want to believe that it is all a psychological thing, and if only they can give confidence to the markets, investors will start buying them again at much higher prices than currently. Ultimately of course that depends on whether house prices hold up or they continue to fall.
Maybe he's right? Who knows how to price these things? What if they'll pay off at 80 cents on the dollar if held to maturity, but they're trading at 20? Or 50? Who knows where they're trading, actually - there's no market. But the foreclosure rate on subprime isn't going to 100%, nor is it even going to 75%. And if the loans were written down to realistic levels, everyone might end up better off.
Doug _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
