dougnhi

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  • Time to Exempt Mortgage Securities from Mark-to-Market Rules
    The key to this failure is excessive leverage. It only takes a 10 percent hit to wipe out a fund that has levered 10 to 1. Marking to make believe encourages moral hazard, and the banks played this game much higher than 10 to 1. Look at the ABX...it tells the story. Even if you don't believe the markings there are right, they're not as wrong as they are right. Add to this gearing at 25 or 30 to one (industry average), and you see that the banks are insolvent (no matter what Bernanke and Paulson have said). Hiding losses will only make matters worse.... didn't your parents teach you anything about this kind of crap? The sooner we take the medicine of truth, the sooner we can recover. Until then, we can only guess how bad it is, and we'll probably guess it's much worse because the banks keep on hiding from the truth! There's the clue that it actually is much worse! If it were not that bad, they'd have already written off the level 2 and level 3 assets.
    Jul 15 16:37 pm |Rating: 0 0 |Link to Comment |View article

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