June 2019

Sun Mon Tue Wed Thu Fri Sat
            1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30            

« Another disaster | Main | City website »

Jan 31, 2011

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

designation

Why do free-marketeers hate mark-to-market so much?

Seriously. Not being glib this time.

From the article:
"Do for households what the Fed sought for the banks: the Treasury (facilitated by Fed monetary ease and bank capital requirements) finances the banks to restate the principal on current negative-equity mortgage loans, restoring them to new mark-to-market zero-equity baselines"

I heard Ben Stein in person in North Carolina literally days after the fall of Lehman call for more government intervention to save the financial system -- begging people to "remember the lessons of the Depression" (his words) to a chamber of commerce-type crowd. The level of cognitive dissonance displayed made me stand in amazement (I couldn't sit for the rest of the speech).

Setting aside why I was bothering listening to a Ben Stein talk, why are certain camps STILL so averse to mark-to-market -- at least now in 2011 if not back in 2008?

Ed Cone

Kudlow was another bold brave soul who begged uncle to help the poor bankers.

Andrew Brod

That 23% figure is impressive, in a bad way. But for how many of those homeowners does it actually matter? Quite a few, I'm sure. The economy still sucks. But does it matter for all of them?

Suppose I owe more than my house is worth, i.e. I'm "underwater." But suppose also that I've managed to keep my job and am making my monthly payments just as before. I may have made a bad deal, but as long as I'm not unemployed, I can keep servicing my debt regardless of the shrunken capital value. I might even be able to keep it up until my home's value puts me back above water. Moreover, my demand for goods is not restrained by being underwater (though it might be restrained simply because the economy sucks and I'm reluctant to spend much).

I'm not arguing against mortgage-debt modification. I'm just curious about what's behind that 23% number.

The comments to this entry are closed.