Lawrence York

Fed Notes Indicate Economy's Troubles Aren't Over

You have estimated a decline in housing prices in the range of 25% or $5 trillion in banking write-downs. This is more in line with our analysis portends the immediate need to shore up the Treasury by taking aggressive action to salvage what we can to shelter the US taxpayer from the losses coming, not only from private companies, but from losses to be (one-day) realized at the government mortage agencies like Ginnie Mae. Time is of the essense as banks typically only hold 5% collateral on a home loan so we are agreeing that $100 trillion in capital reserve deposits (5 x 20 mulitple) will vanish.