Doug wrote: > But, looking at history, the odds are > that it's not 1929 all over again.
I'd agree with this. At this point, there's little basis to anticipate that the mortgage crisis and the turmoil in the markets will lead to a 1930s type of mess. But there are serious reasons to think that the U.S. may enter a *severe cyclical downturn*. You listed those reasons in your post. While such a scenario is not likely to threaten global capitalism, it is likely to weaken the U.S. position in the world. This is important. > He, like > many others, seems almost to *want* a > crackup, because it might make the > somnolent masses wake up and finally > come around to embracing revolutionary > socialism. But they could just as > easily become jackbooted xenophobes or > crazed survivalists. Right. The relation between the state of the economy and the political strength of the left is not mechanical or automatic. Paul Krugman wrote in today's NYT: http://www.truthout.org/docs_2006/081707C.shtml > My guess is that [a solution to the > mortgage mess] would involve federal > agencies buying mortgages — not the > securities conjured up from these > mortgages, but the original loans — > at a steep discount, then > renegotiating the terms. But I'm > happy to listen to better ideas. Is this possible? Those mortgages were securitized, pooled, "tranched" (sliced and diced), and traded. You cannot buy the underlying asset directly. Can you?
