How much are U (S) willing to pay?

[mikea]

As I suspected. Scary, scary, scary...

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke have signaled that their priority is shoring up the nation's banks even if it means they don't get taxpayers the cheapest prices for the devalued assets the government buys.

``I am not advocating that the government intentionally overpay,'' Bernanke told the Joint Economic Committee today, in response to a question from U.S. Rep. Jim Saxton, a New Jersey Republican.

At the same time, Bernanke also repeated his view that the government won't pay ``fire-sale prices'' for the mainly mortgage-related securities Paulson aims to buy in a proposed $700 billion rescue. Officials want to set a long-term value on assets, holding them until they mature or markets improve.

... the Treasury isn't simply buying paper at above market prices. It will be buying it at price high than the banks are carrying it on their books. Remember, that's a requirement. No bank will take a writedown. That would lead to a reduction in equity.

http://www.nakedcapitalism.com/2008/09/new-york-times-spreads-disinformation.html

So much for the $700B not being an expense, but an investment in assets.

 

[Greebo]

What, if you buy an asset that has no value, you mean it isn't an asset???

Shocking!

 

[mikea]

What, if you buy an asset that has no value, you mean it isn't an asset???

Shocking!

The insight here is the liquidity crisis isn't because no one wants to buy the junk, it's because they don't want to sell - and recognize the real market real value!

 

[RMCN172RG]

The insight here is the liquidity crisis isn't because no one wants to buy the junk, it's because they don't want to sell - and recognize the real market real value!

that's correct.

They are also hard to sell because you don't know what the underlying property is or who the payor is.

So a million dollar investment could be a lot of small mortgages or one or two large ones. The problem is what is the underlying devauled property really worth? Is the current mortgage owned by someone who can actually pay it off over the life?

Or did you just by a million dollars worth of property that on the market cannot be sold for $1.00 a parcel because it's in the city of Detroit?

Now if we could by them all up and combine them into one mega pool and name the pool the "SAFE and SECURE NON RISK investment alternative" we could probably resell them at significant profit, at least that's how it used to work