On Sat, Sep 20, 2008 at 10:40 AM, Julio Huato <[EMAIL PROTECTED]> wrote: > Not unlikely, but not necessarily either. Because there's this > self-fulling prophecy thing. If, indeed, the financials collapse and > they drag down the entire economy, then indeed those assets (say, > mortgages) are garbage, because the economy will not help people > service them. On the other hand, if the financials are rescued > (regulated and monitored in their future dealings), then the economy > may improve and help people service their obligations, thus making > those assets more valuable than currently deemed, which may even turn > out a profit to the taxman. > > Can somebody please measure all this stuff and straighten things out > for me? Thanks.
The writer has a good point in the above. The value of these mortgage assets are indeed self-fulfilling to an extent. If the bailout works, those assets will indeed be worth more than if it doesn't. Which raises an apparently paradoxical possibility: the bigger the bailout check the Treasury writes, the *smaller* the ultimate losses may well turn out to be. But a profit to the taxman is utterly improbable. It is more a question of controlling the losses. I suspect that this same self-fulfilling nature makes it difficult to measure this stuff properly at this time. > [*] Paulson said yesterday that, aside from those toxic assets, "our" > (speak for yourself, man) financial firms are otherwise "financially > sound." How do we assess the financial soundness of a firm but by > looking at the predominant assets in their balance sheets? That's like > saying that, aside from a person being lazy, duplicitous, and > cowardly, his character is otherwise sound. But I digress. Maybe he is putting lipstick on the pig.. -raghu. -- "I have a heart of a child... in a jar on my desk." - Stephen King _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
