tag:blogger.com,1999:blog-6048425.post85964492399055547..comments2023-11-02T15:32:15.417+00:00Comments on Bluematter.: Why $700 billion?Unknownnoreply@blogger.comBlogger1125tag:blogger.com,1999:blog-6048425.post-10274005762583597912008-09-26T23:31:00.000+00:002008-09-26T23:31:00.000+00:00There are a few problems with this simple straight...There are a few problems with this simple straightforward calculation:<BR/>1. The bold move by the Treasury was to pay perhaps 50 cents on the dollar for the distressed properties - not 5% of the fair market value of $14 trillion residential and commercial mortgages. That alone reduces the requested amount to $350B using the Fed Chairman and Tres. Sec's own numbers.<BR/>2. Given the lending practices, the majority of the foreclosed properties are likely on the smaller end of the mortgage spectrum so using the $14 trillion number is not correct.<BR/>3. Finally, who has agreed to sign on to the idea that commercial property mortgage instruments somehow should be qualified in this bailout? Talk about a giveaway to business. We have heard the arguments about naive home buyers but naive business people? I guess if that is the case then poor Ken Lay of Enron was just naive too? Give me a break. The losses sustained in the commercial mortgage sector should be completely separated out as a separate issue.<BR/><BR/>Given average home prices of about $210,000 and about 1.3 M homes in foreclosure a bailout of $150 B is about right. Personally, I think that half that amount is all that should be applied because we need to have an adjustment in the market as housing prices have been way out of whack.Anonymousnoreply@blogger.com