Will Housing Crisis Plan Cause Worsening of Credit Crisis?
DriftingByTheStorm
Posts: 8,684
Here is one i never gave pause to.
I am endlessly fascinated by how many "moves" one has to think forward and how many different permutations and possibilities one must consider (as in chess) when dealing with economics.
Like natural systems, everything is interconnected, and things most certainly always have unintended and unforecasted consequences.
One of the panelists up on CNBC just gave a response over discussion on the plan to write down mortgages all across the country. His perspective was that given that banks are no longer the true title holders on these assets -- they were long ago sold in to these packaged investments bought up by 3rd parties which are made up of a broad swath of institutions within the sphere of "the credit markets" -- that the lowering of these values would actually end up causing a further contraction within those credit markets. If the government is dealing investment firms, pension funds and the like a big blow in values, by writing down their investments ... how are they expected to respond?
Certainly not by extending more credit faster
???
You can't lower someone's reserves
and expect them to raise their investment level.
high margins are a large part of exactly what got us in to this mess.
Funny how somethings seem to get missed in the midst.
Any opinions on the matter?
I am endlessly fascinated by how many "moves" one has to think forward and how many different permutations and possibilities one must consider (as in chess) when dealing with economics.
Like natural systems, everything is interconnected, and things most certainly always have unintended and unforecasted consequences.
One of the panelists up on CNBC just gave a response over discussion on the plan to write down mortgages all across the country. His perspective was that given that banks are no longer the true title holders on these assets -- they were long ago sold in to these packaged investments bought up by 3rd parties which are made up of a broad swath of institutions within the sphere of "the credit markets" -- that the lowering of these values would actually end up causing a further contraction within those credit markets. If the government is dealing investment firms, pension funds and the like a big blow in values, by writing down their investments ... how are they expected to respond?
Certainly not by extending more credit faster
???
You can't lower someone's reserves
and expect them to raise their investment level.
high margins are a large part of exactly what got us in to this mess.
Funny how somethings seem to get missed in the midst.
Any opinions on the matter?
If I was to smile and I held out my hand
If I opened it now would you not understand?
If I opened it now would you not understand?
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