[lbo-talk] The Jordan Rules on Mortgages

dredmond at efn.org dredmond at efn.org
Wed Mar 4 18:59:46 PST 2009


On Wed, March 4, 2009 10:41 am, Jordan Hayes wrote:


> Citi, BofA, etc. ... these are decidedly *not* banks.
> These are huge multinational financial services companies [HMFSC for
> short!], for which nationalization can't and won't work.

Sure it will. Call it a different name, if you like -- federalization in the US, euroization in the EU, sovereign wealthification in Japan.


>> The difference between the face value of mortgages and the
>> rapidly-shrinking underlying value is precisely why the US banking system
>> is kaput.
>
> I don't agree with any of that.

Wall Street went and created swaps and CDOs which were leveraged bets on the mortgage bubble. The point is, (1) we, the public, shouldn't be overpaying for any of this stuff -- not the punts insured by AIG, nor the mortgages themselves, and (2) without federalization/euroization, we land in a deflationary spiral which will make Japan 1991-1998 look like a tea party. It's two sides of the same coin.

-- DRR



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