There sure are a lot of people on this board who believe that government can save the economy. I’m not one of them. I’d prefer that the government completely remove itself from trying to prop up asset prices or the economy. I’m totally in favor of large public works projects that help keep the unemployment rate from getting out of control, but I don’t see any reason why the government should be involved with the mortgage market.
Also, those who think low LIBOR rates are going to save the PAY Option ARMs should read Mr. Mortgage:
The main problem for PAY Option ARMs is that most people are making the minimum payment, and it’s the hard reset to full amortization that happens after 5 years that will take these mortgages down. Low rates have no affect on the fully amortized payment.
As for Davelj’s assertion that most of the MBS’s, CDO’s, etc are undervalued right now, well, I think that’s a crock of feces. There are still tons of foreclosures to come and valuing the three-letter-acronyms on current income is highly risky. Also, as another poster above said, do you really think AIG bailout money is “money good”. Please.
