I'd be interested in whether you agree with the assumption that the market have fairly valued these assets, or may be over-reacting to the current "melt-down" in the sub-prime market (ABX assessing 30-35 cents on the dollar). Along that thread, I don't see how 2/3rds of all loans made in the residential sector are 100% write offs, but that's what the current market assumption leans towards well in advance of the actual write offs coming to default dates.
I don't want to fund bankers' enthusiasm, but I also don't want arb's getting 2x returns by accumulating these undervalued assets (by way of defaulting banks, see Citadel+E*Trade deal) which the Fed has mitigated with these floor rates.
Just covering the other side of the argument, I'm somewhere in the middle on this one = lots of folks at fault.
For these now are services that shall pay handsomely for the users and hosts thereof, whereas social networks and video hosts are failing while the LIBOR crumbles into disrepute". (London Interbank Overnight Rate)
And, so the President's of Vice fanned through the supplicant's reporting, and commented thus:
" Have you no Facebook, no twitter, or not even a mention of the moment?, he said for the group gathered?
I took my account of all that fell to my eyes, in view of all there, and saw, and saw, not just what was there, but what, to my understanding could have been manifest in due:
"I see, growing faint, that there are people carrying boxes and milk crates from their desks all about, while we here sip and sup, while the Demon bride lances furiously at a QUERTY on a bus in the Loop, we see that here before us there is an edifice about to fall - boxes they are carrying, don't you see, here before you, your friends and co-workers...!"
They looked at me appalled, and said, "and you, you will save like the Hebrew Messiah of Olde? To stir up insurrection rather than play to the ear of the Emperor? "
They then clamored about themselves, and said, "we had you here, at our gracious invitation, not to incite, but to lull the end of year fears!
I railed at the collected gathering while keep my voice civil;
"Our good coin is disgraced, while we wash each other's dishes, and sell to each other insurance, and as we cede the hard crafts and professions to who will someday dominate us all from the East.
...'Now what buys today a loaf, tomorrow buys a muffin, and if the Lords in your Assembly here hide from the truth, our coin will soon buy Nothing." An eerie echo filled the conference room without a call from your author truly:
"I say, the bill must be paid, whatever models you craft, must be justified, thus creating a value, a service good and well for all, besides the evil duplication of you all".
"To make a NEW THING, your legacy out here North and West, but a disgrace upon you, all who copy and echo and inflate with words, you will give away a legacy of gold."
"Heed my words, Lords of the Valley, create and truly innovate, and stop this foolish rally of the duplication of your models and the twittering of fools".