Democratic Underground Latest Greatest Lobby Journals Search Options Help Login
Google

When World News Trust: Krugman Is Correct But Has Wrong Conclusion (William Chirolas)

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Topic Forums » Economy Donate to DU
 
Tace Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 09:48 AM
Original message
When World News Trust: Krugman Is Correct But Has Wrong Conclusion (William Chirolas)


To ask bank shareholders to take a greater hit so that bottom feeders can profit from a suspension of classic good accounting for held-to-maturity assets is nonsense.

William Chirolas -- World News Trust

Jan. 21, 2009 -- Paul Krugman, in a New York Times column Monday, entitled "Wall Street Voodoo," states his conclusion that our banks are walking dead and that the shareholder investments in those banks should be wiped out so as to reflect the current values on offer for "toxic assets" (derivatives that are tranches of aggregated mortgages).

It is hard to disagree with Krugman because he always gets his facts correct, but in this case his conclusion is not one I share.

There is indeed no current working market for those "toxic assets," and while certain bottom feeders are offering silly prices for the investments, those prices are "the market" only if the concept of "held to maturity" is now dead along with a death of the need of pricing cash flows to a rate of return that is "market.

more

http://www.worldnewstrust.com/wnt-reports/commentary/wh...
Printer Friendly | Permalink |  | Top
depakid Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jan-21-09 09:56 AM
Response to Original message
1. People tend to confuse "illiquid" or "hard to value" with "worthless"
That said, I still think Krugman has the right idea- set up an RTC like entity and deal with this once and for all.

Doesn't make any sense to keep trying to plug up holes in the dyke.
Printer Friendly | Permalink |  | Top
 
DU AdBot (1000+ posts) Click to send private message to this author Click to view 
this author's profile Click to add 
this author to your buddy list Click to add 
this author to your Ignore list Sun Dec 28th 2014, 10:54 PM
Response to Original message
Advertisements [?]
 Top

Home » Discuss » Topic Forums » Economy Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002 DCScripts.com
Software has been extensively modified by the DU administrators


Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC