"Buy up all the bad mortgages."
I could be wrong. I've said many times I'm way over my head with this issue. But here's the problem that makes this so very very difficult to grapple with: nobody knows who owns the distressed mortgages. They are bundled into securitized investments and sliced into a gazillion shares and were traded back and forth endlessly. So the result is that when you have an individual mortgage, there is an administrator, but no obvious owner. So who are you going to buy the mortgage from?
And also, the bailout apparently involves that the Treasury will buy up all the mortgage-backed securities that nobody can trade any more. So don't we maybe already own the distressed mortgages?
There's been a lot of talk about this proposal, mostly of the "the right will hate this," variety. I need to hear what a real economist thinks.
2 comments:
The bailout buying the securities is what they mean when they say "Buy up the bad mortgages."
I read the real economists constantly, they're divided. They seriously don't know how to make this better. They're making bets like everyone.
The nice thing about Bernanke and Paulsen is that they know one thing for sure, that sitting and waiting is not a good option. It's certainly *an* option, it's just the one option we know is bad.
In the world of all bad options, they are at least picking a clear path and forging ahead.
I hate them.
Hard to say, since we haven't seen a proposal yet, but it sure sounded like he was talking about directly buying mortgages. I hope to see something concrete on that soon.
Post a Comment