“There are two scenarios,” he said. “Scenario one is that the default activity is a nasty case of indigestion that has to be digested, and once it’s digested, the market will rebalance itself. Scenario number two is where we factor in the recession. If we are in a recession, it’s not indigestion anymore. Then the default acitivty will start to migrate from this pool of at-risk home loans into the more mainstream mortgages.”
I guess a recession will be avoided, despite the unemployment news and low-income jobs?
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