"Troubled assets that are clogging the financial system"

[SlipperySlope]

I can't believe this lying POS.

If they buy the assets at their true market value then the banks are no better off than they are now - still insolvent.

The ONLY way to recapitalize the banks is to pay MORE than their true market value - i.e. let the taxpayer eat the loss.

Housing prices have a another 20% to 30% down to go. Those mortgage backed securities are never going to come back to par, never.

Bend over America, and get a BIG BIG tube of K-Y ready. If Bush get's his way he will be giving the shaft to you and your children for generations.

[Mojambo]

1. Yeah, that's what Herbert Hoover said. Then he tried to bail out the banks.

Didn't work out too good back then.

And it'll work out even worse now.

[unblock]

2. that's not true at all. the problem is that there IS no market for these assets

no one wants to touch subprime anything, certainly not derivative stuff off subprime mortgages. there's a fair value, but no market value because there is no market.

[SlipperySlope]

3. Sorry, it's over.

People saying the "fair value" of a subprime CDO is above the "market value" remind of beanie baby collectors.

"What do you mean my Derby the Fine Mane Beanie Baby Horse is only worth $2.25? I paid over $6,000 for it. Whaaaaa!!!! I want a bail-out!!!"

In July, Merrill sold $30.6B of super-senior CDOs at 5.7% of face value. THAT is the fair value. THAT is what the government should pay for these notes.

These things aren't frigging Picasso paintings where the value is going to come back after the market softness is over. These things are Dutch tulips circa 1638, they are South Sea stock circa 1722. They are Weimar Reich notes circa 1925. They are practically worthless, and they are going to stay that way forever.

Repeat after me: This is not a liquidity crisis. This is a solvency crisis. The banks are bankrupt, and only recapitalization will save them.

[unblock]

4. except that these assets have an actual cash flow associated with them. we just don't know how much

merrill sold at a terrible price because they were desperate not only to get some money, but to get those toxic assets off its books. they'll likely prove to be worth way more than 5.7% to whoever holds them to maturity. beanie babies were never worth any more or less than what the market would bear at the moment, partly because their value was all in what people thought they were worth, and partly because the markets were functioning normally.

that's the distinction i'm trying to make. "market" price does not correspond to "fair value" when the market is completely screwed up.

[Stinky The Clown]

5. Give 'em a high colonic in their assets and see if that helps.

Fuck heads