Quote:
Originally Posted by PBzeer
My take on it Chuck, is that since most of the so called toxic assets are not in default, they do have value. But because of mark to market, there is no perceived value in them. Even though most of the mortgages in the MBS's are performing, there is no market for them due to the non-performing ones.
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First off. I agree with Chuck.
The problem John, is they aren't saying which Tranches are 'toxic' and which are 'good ones'. Remember they were all mixed together to get them by the rating houses.
No one in the market will take a chance on them. Which brings up an excellent point. Who decided which Tranches the treasury dept buys? And after they buy them, and pronounce the remaining MBSs 'good ones'. Who's going to believe them?
The underlying problem is trust. These were all sold as an excellent investment vehicle. The investment banks maintained that illusion until the actual mortgages began defaulting. So, is a Tranch that's pronounced good today, suddenly a bad one if mortgages inside of it begin defaulting next month? If that's the case, where does it all end?
I hate this plan. I think we're throwing money at the wrong end of the spectrum.