Replies to post #613139 on Zeev's Turnips Patch-No Politics (ZEEV)

[brainlessone]

not really me thinks, its just a sucking sound when the money supply contracts hard. A lot of tarp money went to ledger accounts to collateralize obligations and is just sitting there. the money hasnt gone anywhere.

things have to be bought and sold to lose money.

i know there are plenty of real losses. but if you hold 100 billion of MBS's and 30 percent of the houses in them are foreclosed, then I would think that the MBS's would be worth 30 percent less. In a mark to market world, no one is willing to say there are only 30 percent of the houses in that MBS, so they value it at 10 percent and Merrill takes a 90 percent loss on the books, which changes the equity to loan ratios and alters the capital stock of merrill which makes merril put up more money to sit on a ledger account somewhere to collateralize an obligation. And all that money gets sucked out of the money supply and Merrill reports a huge loss. If you accounted for it differently / or had a better system to define and determine what the real risk was per security ( the real problem) then I think the finaces would be different. Meanwhile the MBS obligation has not been sold, no money has been exchanged, no real loss, just paper changes

At least this is what my pea brain thinks. feel free to take a swing at it too

[zab]

Real Estate is just like the stock market, but just like the market when you could put down 10 % and borrow the rest, in real estate you put nothing down and borrowed the rest, sometimes even more than that. I am sorry people got hurt in real estate, but thats what happens when the real estate market became a casino, instead of what it was suppose to be, the family home.

Those people and the banks that either lent the money or bought the loans should lose everything, then the market will stabilize and someday come back, and those people who paid there bills all along will make out fine.

This propping up of markets and the economy is not helping, I know the economy and many people will get hurt, but thats the price we all pay for living in a capitolistic system. But maybe I am getting too old and need to understand the new economy where no one loses.

zab