Wednesday, April 8, 2009

Firesales underpricing toxic assets

http://www.businessinsider.com/how-can-mortgage-securities-be-worth-so-little-when-houses-arent-going-to-zero-2009-4

Megan McArdle at the Atlantic's Business blog raises two objections.

1 If toxic assets aren't underpriced, we're all in "big, big, BIG trouble."
2 The market prices for toxic assets don't reflect reasonable expectations of cash flows.


My own take, I agree #1 is lament not a response or a attack against the statements.
#2 if I its worth a penny is that better then zero? In the end most of this stuff is worthless or near worthless. The semantics between the two make little difference

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