[lbo-talk] Wapo: Economists Question Basis of Paulson's Plan

Doug Henwood dhenwood at panix.com
Sat Sep 27 12:27:29 PDT 2008


On Sep 27, 2008, at 1:14 PM, SA wrote:


> It's not that "hold-to-maturity" prices are the "wrong" prices, it's
> that they're subsidy prices.

Not necessarily. These securities may pay off 85 cents on the dollar if held to maturity. But with mark-to-market accounting, they have to valued at their present market price - and whatever that is, exactly, it might be 20 or 30. But no one's really buying. If the gov sets a floor under the price, the m-t-m price will go up - and the gov could make money on the deal too.

Not saying that this will happen, but there's a reasonable chance it could.

Doug



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