quantyk

Paulson's Plan is About Marking to Market

Thanks for this insight; sharp as a needle in a stack of bowling balls. Would this manoeuvre somehow translate "hold-to-maturity" value, which arguably only the government has the fortitude to eventually realize (10-20+ years?), into a usable benchmark for current market value? Would surviving market makers (or newly opportunistic players) apply a haircut/discount to the prices Treasury pays for these things under Paulson's Plan to derive some usable trading basis, restoring liquidity to the overall system? Seems like this could make sense...
But what I really don't understand is why they felt the need to sweep this mess under the Constitution, or what's left of it. Especially since this kind of thing has happened several times before (Continental Illinois, RTC, etc...) It seems the tools and techniques to fix this crisis are already in the Government's toolbox (perhaps a bit dusty?) : the bailout principles seem the same, albeit on a much larger scale. No need, and no excuse, to rewrite or suspend the Supreme Law of the Land to fix this mess.