Here you are advocating that the government buy mortgage-related stuff in order to avoid a depression.
By the way, are you still confident that the “vast majority of TARP money” will be “money good” now that Bank of America and every other large bank is saying that they need another bailout?
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Um, Breeze, that “mortgage-related stuff” is most decidedly NOT MBSs/CDOs, etc. Let’s at least keep the terms straight. What I advocated in that post was that the government – us taxpayers, that is – eat principal reductions for lots of folks who are underwater. In buying MBS, etc. from institutions the government (a) doesn’t really know what it’s getting in terms of losses, and (b) is really helping out the institutions involved, as opposed to individuals. In offering plain principal reductions, the loss content is more straightforward and you’re helping homeowners in a more direct manner. You may be opposed to both, which is fine, but they are two different things. But you have a record of being confused on similar matters.
Yes, I still think the vast majority of the TARP money will be money good (specifically, that is, the money being invested in bank preferred stock). You may recall, however, that I acknowledged that there would be some failures – which you neglected to mention in your post. Exactly which large banks, aside from BofA, are saying they need another bailout? You’re saying “every other large bank,” so I assume you have many specific names aside from BofA. As an aside, I thought the Merrill deal was absurd for BofA. Never should have been done… now they’re reaping what they sowed (along with the US taxpayer!!).
