US Congress is considering
#1
Posted 04 November 2007 - 12:00 PM
#2
Posted 04 November 2007 - 12:17 PM
#3
Posted 04 November 2007 - 12:20 PM
#4
Posted 04 November 2007 - 12:51 PM
Thank you for that information. As the old saying goes (something like this anyway ) The only things that have value are what you can take out of the earth.
Best to you.
johngeorge
#5
Posted 04 November 2007 - 01:59 PM
#6
Posted 04 November 2007 - 04:28 PM
Recently two pieces of legislations (bills) proposing a Congressional guarantee for the toxic instruments (held by nearly all financial institutions) have surfaced. In effect the plan is to give toxic sub prime an arbitrary US Treasury value of .50 cents on the dollar.(a form of instant money). The hope is that this will free up the sale and exchange of these toxic obligations since the risk of loss is greatly reduced, and the current holders would get only modest coverage of their losses (punishment for creating the mess). Everyone wins!
But wait! The dollar goes to hell: when Congress has to make good on promises by cashing in the obligations no one else wants to hold. It will require billions, if not trillions of dollars to be printed to monetize the worthless junk.
OK, I have a problem with this. Somewhere, on the other side of this "junk" are a bunch of folks living in houses that they are paying or trying to pay a mortgage on. Some are going to fail. Maybe a lot. Probably not all of them.
Those that do will foreclose or do a work out.
Even if EVERY ONE of these loans goes to foreclosure, your statement implies that there will be no recovery on those properties for the lenders (paper holders).
I'll take the other side of that bet. I'm not smart enough to know what the real value is. I am smart enough to know that Zero isn't it.
There are smart guys, however, who are trying to figure it out. There are a lot of different work outs here and the more time is bought, the better it's going to be. Will it be $0.90 on the buck? I seriously doubt it. Will it be $0.70 on the buck? Well, now, that's getting more in the ball park. Could it be worse? Sure. Could it be worse than $0.50? Not too likely, unless you had wholesale forced liquidation. Such would create uneconomic valuations of both debt and the underlying assets. I'd certainly commit a significant sum to said debt at $0.30-0.40 without a clue. I'll always buy a little in a panic and that's a panic. After all, Most homes are worth a lot more than 50% of their appraised value, even in this sick market. And, folks gotta live someplace.
Anyway, try to tear this problems down to their basics. When you do, I think you'll see that it's never quite as bad as it seems.
Mark
Mark S Young
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#7
Posted 04 November 2007 - 06:39 PM
#8
Posted 04 November 2007 - 07:22 PM
Edited by Islander, 04 November 2007 - 07:25 PM.
#9
Posted 04 November 2007 - 10:48 PM
Mark S Young
Wall Street Sentiment
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#10
Posted 04 November 2007 - 11:41 PM