[quote=SK in CV]Yves Smith at naked capitalism (who may just be the best and brightest economics blogger out there today, and has been closely following and reporting on this subject for months) has a great analysis on a proposal by DC thinktank Third Way to let the TBTF banks off the hook for their transgressions in mortgage processing. She calls it another bailout. If this is a subject you’re interested in, don’t miss it.
Great. The idiot specuvestors who choose to overpay by outbidding more qualified and more prudent buyers now think they deserve loan mods that reduce pricipal balances. So, based on this precedent, anytime somone overpays for something, and the price goes down afterward, as long as they borrowed against it, they are entitled to have the price (and corresponding debt) reduced?
The mass insanity is remarkable. I guess everyone should outbid everyone else — but be sure to borrow all or most of the money used to bid — and we can just reduce our price and debt after the fact. It’s all good. Nope, no moral hazard issues there!
