On Mon, Sep 29, 2008 at 10:39 AM, Doug Henwood <[EMAIL PROTECTED]> wrote: > 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.
No doubt he is half-right - that many assets are being currently undervalued. But Paulson has been deliberately vague on how they propose to determine a price for these things. Even if a security pays off 80c on the dollar if held to maturity, its present value surely depends on things like future interest rates which themselves depend on the indebtedness of the US Treasury and hence the price they are willing to pay for those assets now? In other words, we may have a situation where the "fair price" of an asset depends mainly on what Paulson thinks the "fair price" is. It almost seems like Paulson cannot lose no matter what price he picks. What is wrong with this picture? -raghu. -- "As a matter of fact, no, I don't have a life." _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
