Sub-Prime Mortgage Meltdown
By Kurt O'Keefe, Attorney at Law on Oct 13, 2007 in General Bankruptcy Information
As the time when the Emperor is accepted to be wearing no clothes draws near, do not fear, consumers of America. The bankers are in secret meetings to avert a recession.
Theirs, not yours.
Not my area of expertise, SIVs and commercial paper, but it seems to boil down to this: The big fellas are worried that the markets will value their sub-prime backed paper at what it is really worth, zip, causing billions in losses to show on their books, and impacting their profits. So, realizing that nothing is worse for a market than uncertainty, and the cat is out of the bag that they have no idea which of the mortgages backing this stuff are real and which are worthless, they want to create a new pool of cash to buy the worthless stuff, from each other, to keep up the fiction that it has value, so the price of same does not decline, which would require the much feared losses to be posted on their books.
Not identified in the linked story is the source of the money to set up this fund.
Could it be our own “helicopter Ben” Bernanke?
Would the Fed open the overnight cash window to dole out dollars (backed by the worthless paper the big fellas are trying to pass off as having some value) to create this emergency fund?
The Fed reportedly did so during the summer cash sale, to stave off a “liquidity” crisis.
Wonder how much they have for you and I, if we have a “liquidity” crisis? Think they would accept the declining value of our homes as collateral?
Can you spell B-A-I-L-O-U-T?
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