Tradesense

Good Bank, Bad Bank: Is There Any Other Way Out of the Crisis?

Steve

To my mind what you have mentioned is the effect of not addressing the cause in a simpler and straight forward manner. The idea is to stabilize one key part of the crisis - so that it has calming effect on the others and provides confidence in the leadership. The idea is to use simpler approaches with less collateral damages (known and unknown) and that is politically expedient too...otherwise it may be too late...hopefully we are not yet beyond repair. The focus is also to try and find value of derivatives which have mortgages as the underlying. You may then create regulations that could address the do's and don’ts.


Feb 01 01:52 PM steve graves wrote:

> Yeah you're missing something - something quite incredibly obvious
> and fundamental. The root of the problem may have been sub-prime
> mortgages, it's true, but the idea that can now somehow gobble up
> this sub-prime debt and magically mend the global financial crisis
> is almost ridiculously naive. Sub-prime may have been the catalyst,
> but the contagion has spread throughout our over-leveraged financial
> system and into the economy as a whole. Commercial real estate is
> collapsing, jobs are being shed at record pace, derivative markets
> are coming unravelled, the so-called 'shadow banking system' has
> been completely obliterated, etc. It's like lighting a match to burn
> down a house; once the house is on fire the match becomes irrelevant.
> And blowing it out won't do a damn thing to save the house.