I thought the 120 mortgage banks that have closed up shop was more of a 'signal' that something was amiss.
They're all sitting on garbage. Foreclosures in July up 93% YoY and there's still over $2 trillion in resets coming.
No wonder people want money/T-bills. There won't be any money left once the debt on their books gets revalued by 90%.
I keep seeing news articles referring to 'liquidity crisis' and 'credit crunch'. Big misconception. There are trillions in bad paper out there. That paper is worth a fraction of what people bought it for. Reducing rates to zero wouldn't help either.
Paulson just said "Will See Liquidity Return to Normal" on CNBC
He's telling the truth... but ignoring the reality. Liquidity isn't the problem.
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