The financial losses that are being announced almost daily are starting to blur. What sense should we make of the $11.1 billion write-down that AIG, the giant insurance company, took on its investment portfolio? Is this stupefyingly large, or just very large? A lot of the loss related to subprime mortgage securities and credit default swaps, and AIG said more losses are to be expected this year. Will these be much bigger? Since AIG isn’t saying, we have to guess.
Which means we have to pay attention to the estimates of losses for the financial industry as a whole that are starting to be published. This past week the Swiss bank UBS said it estimated that total global financial industry losses from the credit crisis will be around $600 billion. That sounds gargantuan, but who is included in the definition of the global financial industry, and how much of total industry capital is at stake? It is time, therefore, to put these losses into context and see if the financial industry is being hurt, crippled, or mortally wounded by these losses.
To help us on our way, we can turn to an interesting quasi-academic study published Friday by four leading economists in academia and on Wall Street. It was submitted to the U.S. Monetary Policy Forum at Brandeis University and is titled
· The credit crisis that began in August last year was related to mortgages and mortgage-backed securities, and other credit or equity markets were unaffected, at least initially.
· The losses were borne largely by the financial industry, including banks and brokers, but also other players involved in the securitization process.
· Who bears these losses is critical, because the more leverage that is used by a financial company, the more that company must scale back activity to cope with losses. Leverage is defined as the ratio of assets to capital.
· The banking and savings industry in the U.S. operates on a leverage ratio of 10:1. The brokerage and hedge fund industry has far less capital; its leverage is 32:1. Interestingly, the Government Sponsored Enterprises (GSEs), which consist mostly of Fannie Mae, Freddie Mac, and Sallie Mae, operate like a hedge fund and have leverage of 25:1.
· Leveraged institutions, when faced with large losses, almost always scale back on their main business of lending money to businesses and consumers. Because they are by nature leveraged institutions, the amount of lending that is eliminated is a multiple of the losses incurred.
· Based on their research of existing and projected mortgage market default rates, they estimate total U.S. financial industry losses from mortgages and mortgaged-backed securities will be $400 billion. Half of this will be allocated to the banking industry. These numbers do not include losses from other products such as credit default swaps, or from any weakness in the economy caused by these losses.
· $400 billion of losses will translate into a reduction in lending of nearly $2 trillion. This in turn will reduce GDP growth anywhere from 1% to 1.5% in the coming four quarters.
The authors present a very interesting table in their paper, among many charts and tables worth studying. This one shows the U.S. financial industry by sector, the assets and liabilities, capital, and leverage.
Several things stand out from this table. First, the commercial banking industry has total capital of $1.1 trillion. This is highly concentrated, in that the top ten banks out of over 7,000 commercial banks in the country have more than 50% of the capital. They will be sharing a proportionately larger amount of the losses, at least from the initial go-round of mortgage losses. The authors estimate this to be $200 billion out of the total $400 billion, or nearly 20% of the capital of the industry.
Commercial banks have so far announced about $60 billion in losses, so according to this study they have quite a bit more to go. But the study does not include losses from credit default swaps or other derivatives, from municipal securities, from commercial real estate, which is just starting to contract, and from a severely weakened economy that will ratchet up losses from auto, credit card, and other consumer loans. It is certainly possible to see total losses for commercial banks coming to 33% to 50% of their total industry capital.
The industry has been working hard to replenish capital, mostly by taking infusions from the sovereign wealth industry, as it is called. These are the governments of oil producing countries and large exporters like Singapore, who have been happy doling out $5 – $10 billion here and there, but who are showing signs of reluctance to take on too much more risk in this environment. Banks are also issuing calls for equity capital, usually in the form of preferred stock, but the stock market is getting progressively weaker and pretty soon will be an uncongenial source for new capital.
The Federal Reserve has a traditional method for rebuilding capital in the banking industry ”“ it lowers short term interest rates and counts on a positive sloping yield curve to help banks generate almost guaranteed profits. In other words, banks can borrow at 2% short term and lend at 5% long term for a fat 3% spread on the loan. This is one reason why Alan Greenspan dropped short term rates to 1% after the Tech bubble collapsed in 2001. It worked then: banks lent at generous returns and reaped extraordinary profits. Greenspan even gave a speech telling bank executives they would be fools if they didn’t garner the funding profits he was providing them.
Ben Bernanke is trying the exact same thing, only this time it’s not working. The places where the fat returns are, like home mortgages, commercial real estate, and junk bond finance, are precisely those places where the loan losses have been greatest, and where banks now fear to tread. Instead, they would like to put their money in ultra safe U.S. Treasuries, but here the yields have collapsed as everyone has been rushing into the safety of these government securities. In some maturities, the yield on a Treasury is less than the cost of short term money from the Fed.
Desperate to make this sure-fire profit-building exercise work for the banking industry, Bernanke has suggested last week that he will push short term rates even lower, despite the weakness of the dollar and the clear signs that inflation is now exceeding the Fed’s maximum target of 2%. The market is expecting another whopping 75 basis point cut in the Fed Funds rate soon. This may help, but the guaranteed, sure-fire profits for banks even so will be much reduced from what has typically occurred in a recession.
This means it will be years before banks can rebuild their capital. No wonder they are cutting back on loans and other risky ventures. They are conserving every penny of capital that they can. If losses get to around 50% of industry capital, we can certainly say that the banking industry will be temporarily crippled, meaning for the next 3 ”“ 5 years. A number of banks won’t make it, including some in the top 10. The FDIC, which insures consumers against bank failures, is already predicting an increase in bank defaults, and interestingly is pointing to commercial real estate as the biggest risk to banks. Commercial real estate losses aren’t even in the studies we have been looking at here.
Going back to the table above, you will remember we will have covered only half of the $400 billion in mortgage losses predicted by the authors. The other half is likely to be borne by the brokers, hedge funds, and the GSEs. Notice, however, that these sectors of the industry have only $237 billion in total capital, and are the most highly leveraged sectors. They have on average nearly $28 of assets for every $1 of capital, and as they frantically try to reduce their assets, they are driving down the prices of these assets for themselves and everyone else, causing even more losses. It’s a death spiral of destruction, spread systemically through mark-to-market accounting.
This study suggests that about 85% of the capital for brokers, hedge funds, and the GSEs could be wiped out by mortgage losses alone. Clearly in such a circumstance many of these institutions will not survive, and the remainder will be among the walking wounded in the financial industry. Two of the four authors of the study come from Wall Street, and are relatively sanguine about the leverage of their firms, arguing that the assets are all short term rather than loans. But it is the short term, Aaa securities that have been shown wanting in this crisis, and we can’t take too much comfort from the supposed liquidity of Wall Street firms. Merrill Lynch has already written off 20% of its capital, so it is easy to see how they and other brokers could wind up with little or no capital left.
The two main mortgage GSEs, Fannie Mae and Freddie Mac, have long operated on very modest capital bases, arguing that if they got into trouble the U.S. government would be behind them. They are, after all, chartered by the federal government, but no one in the Treasury or Congress has seriously thought that they would have to recapitalize these companies to the tune of $100 billion of more. Quite the contrary ”“ the GSE regulator has just authorized Fannie Mae and Freddie Mac to begin increasing its balance sheet, having set caps on growth just a few years ago due to the inability of GSEs to properly manage their portfolio risks.
Perhaps the GSEs have substantially improved their risk management skills, but increasing their portfolios now could have the perverse affect of damaging these two companies. The derivatives used by the GSEs to hedge their mortgage portfolios are even less liquid now than four years ago, when problems first emerged in Fannie Mae’s portfolio. It’s not even clear that derivatives, which help manage interest rate and prepayment risk in mortgages, can do anything about the treacherous default risks that are permeating mortgage books.
For example, mortgage problems are extending to the Alt-A and even prime categories of mortgages, previously thought immune to serious default risks. The problems are affecting not just mortgages booked since 2004, when credit standards virtually disappeared in the market, but even earlier for fixed rate mortgages to borrowers with high credit scores. It seems that an increasing number of homeowners are in financial distress, and are late paying their mortgage as they struggle with a job loss, health problem, or merely coping with the accelerating costs of food and energy.
This is the point where the financial market implosion meets up with an economy in recession. These two forces are symbiotic and reinforcing. We saw this past week an unprecedented large spread develop between interest rates for municipal bonds vs. interest rates for Treasury securities. Normally municipal bonds trade close to the yields on Treasuries, due to the tax-exempt feature of municipals. But the complete collapse of the variable rate auction market for municipal securities has forced the many users of this market to begin issuing traditional fixed rate bonds. This sudden surge of fixed rate paper on the market is overwhelming buyers of such paper and driving yields up, meaning much higher interest costs for the municipalities involved.
Whereas a month ago many municipalities were blithely auctioning off short term securities costing them about 2% p.a., they are now paying 5.5% p.a. or more and forced to lock in this cost for the long term. The auction process suddenly collapsed because the investment banks/brokers which managed the process stopped buying any left-over paper not purchased by investors at the auction, because these brokers themselves could no longer stomach adding more assets of any sort to their balance sheet. They are, in other words, trying to reduce leverage, not increase it. It is exactly as the authors of the paper speculated ”“ the credit crisis will cause huge cutbacks in the amount of money available for loans.
What happens when the Port Authority of New York or the Los Angeles Airport authority have to pay nearly triple the amount of interest on their debt? Job cutbacks, service reductions, and tax increases that are going to hurt the local economy. This is exactly how the credit crisis exacerbates the economic recession.
We are only at the beginning of this process. We haven’t yet seen large numbers of layoffs as corporations hunker down during the recession. There are other capital markets that are wobbly and prone to collapse ”“ and let’s bear in mind that the markets that collapsed in August, for products such as mortgage-backed securities, collateralized debt obligations, and asset-backed commercial paper, have not come back. This alone is far beyond the usual experience in a recession. Nor has the stock market truly come to grips with the full impact of these market and economic calamities, though that may happen soon.
We appear to be approaching a flashpoint of recognition for all the markets, and for most investors. Part of this recognition will find investors digesting the dire situation facing the financial industry. If we are lucky, the U.S. and global economy will avoid a stampede of investors and depositors out of suspect banks and brokers and insurance companies. But at this stage, avoiding a ”œrun on the bank” is really a matter of luck, since the regulators and government officials can do little to stop it, especially as the crisis is aimed at the largest institutions as well as the smallest.
Sophisticated investors are already asking ”œwhere will my money be safe,” because they have already experienced having some of their ”œliquid” assets frozen, or they know someone who has. At the pace at which this financial crisis is unfolding, we’ll all be asking that question soon.
….equal to any of those of Heironymous Bosch, during the height of the Black Plague.
If there is a God, pray that He’s not going to allow us to live to see the kind of days you seem to pointing toward. The Worst case scenario, IMO, points to the possibility of a crash to make 1929 look tame, needing a war like WWII from which to recover.
As much as I respect Carlin, I’m not as separated from my fellow men as to be able to take a similarly voyeuristic stance on Humanity’s future….I tend a little more towards the nihilistic at this point.
Carlin wants to see what happens, just to see what happens. I’m tending to want to take the ringside seat and root for the destruction, mainly because while even I’ll be hurt, those whose shortsightedness and greed authored this, will be suffering also.
-5.75,-4.05
“We’re all fucked. It helps to remember that.” –George Carlin
I think all ya gotta look at is how the FDIC has gone back to all their recently retired bank paper pushers, the guys who processed all the 1980s Savings & Loan collapses. Those experienced hands are getting hired back as fast as they can find em.
a repost of the WSJ on this:
http://www.tickerforum.org/cgi-ticker/akcs-www?post=30796
FDIC Readies for a Rise in Bank Failures
By DAMIAN PALETTA
February 26, 2008
WASHINGTON — The Federal Deposit Insurance Corp. is taking steps to brace for an increase in failed financial institutions as the nation’s housing and credit markets continue to worsen.
The FDIC is looking to bring back 25 retirees from its division of resolutions and receiverships. Many of these agency veterans likely worked for the FDIC during the late 1980s and early 1990s, when more than 1,000 financial institutions failed amid the savings-and-loan crisis.
• Out of Retirement: The FDIC is recruiting 25 of its retirees experienced in handling insolvent financial institutions.
• The Reasoning: The agency is preparing for an increase in failed financial institutions as the housing and credit markets worsen.
• What’s Next: The FDIC will give an update today on the number of “problem” institutions that regulators are watching most closely.FDIC spokesman Andrew Gray said the agency was looking to bulk up “for preparedness purposes.” The division now has 223 employees, mostly based in Dallas.
—
Hongpong.com
Whoa – that’s some nihilism you got going there!
“Frankly, we’ve lost a lot in recent years.” – General Colin Powell
For those who have not heeded the Boy Scout motto I suggest you put away 500 lbs. of beans and rice for every member of your houshold.A vegetable garden is going to be a necessity. A garden tiller and cans of seed should be aquired before shortages begin. All staples such as cooking oil,flour,salt and pepper,powdered milk are rising in price. Stock up now before rationing begins.Imagine life without electricity or natural gas and prepare for the worst. When checkpoints are installed how long will you be able to stay at home? An Obama win will mean the end of the second ammendment,you with me kiddies.Hope for the best but prepare for the worst.
Curious George
Preparing for his 14th HBO comedy special, George Carlin waxes philosophic on the freedom that comes from not giving a #%&@.
SALON
Enjoy
You did a superb job connecting the dots, Numerian. Light years ahead of the single factor analysis that dominates our visual & print media.
Despite all the hot air regarding no Goverment bail-outs, the Fed seems to have some interesting tools in their arsenal. One is the Federal Home Loan Bank, and another is the so-called Term Auction Facility, or TAF. Reports indicate that the Fed has lent scores of billions to the banks over the last few months via the FHLB or the TAF. James Grant, in the the Febuary 22nd edition of his Interest Rate Observer, quotes one analyist (Christoper Wood at CLSA) who asserted that the Fed is taking “the garbage collateral nobody else wants to take”. Grant’s associate, Ian McCulley stated that “a bank can borrow at 85% of par value of a triple AAA rated CDO, and 80% of the par value of a non AAA rated CDO. If this isn’t socialism for the affluent, and, as far away from Ayn Rand as we’re gonna get, I don’t know what is! While I still think foriegn kleptocracies “need” to sell us their “stuff”, we are certainly tempting fate to the utmost!
The Fed insists all its collateral rules are being followed, but these rules have not been amended to reflect new market conditions, so some dicey securities are being taken with very generous haircuts of only 15% (“I’ll lend you $85 for every $100 of collateral”).
The first risk for the Fed is that these loans get rolled over again and again as the bank is unable to come up with the cash to pay them off permanently (and they probably don’t want the collateral back because they would have to take an instant write-off to bring it to market). Then, if a bank should get into trouble and wind up in FDIC receivership, will the FDIC pay the Fed off on behalf of the bank? It’s not clear, especially if the FDIC is starting to feel pinched itself. It is only funded by bank reserves and not by Federal government money.
The place to watch, however, are the GSEs. Fannie and Freddie seem to have to write-off $3-5 billion a quarter, and they don’t even have any of the dreadful paper that constituted liar loans, no doc loans, etc. In a recession, these write-offs could soar and eat into their capital very quickly. Then what?
Worse still are the Federal Home Loan Banks. They have been taking on tens of billions of dollars of shaky collateral for loans to the mortgage industry. Countrywide has gotten most of their funding from the FHLB of Atlanta, and I think the amount is larger than the Fed’s TAF. This has been done under the radar and when it was discovered may have prompted the government to push for the Countrywide merger with Bank of America. Like the Fed, the Home Loan Banks are being used as a dumping ground for mortgages no one wants to touch anymore.
The best staples in the event of an economic collapse BESIDES self-sufficiency are:
1) Cigarettes
2) Hard liquor
3) Condoms
4) Salt
5) Honey
The first three are self-evident… salt is required for preservation of meat, whereas honey is a nice all-purpose sweetener (and antibiotic) that never spoils.
Some say to horde guns, but there are risks… if people know you have guns, then other people with BIGGER guns will come and take them from you… besides, blades don’t need reloading.
—
http://bexhuff.com
Of COURSE you can trust the US Government! Just ask the Indians.
he’s still my hero, even if he’s not *a* hero!
his arises from being able to call it as he sees it, damn the torpedoes…he’s not kissing anybody’s ass
http://youtube.com/watch?v=2UVXj8F9Fmk
-5.75,-4.05
“We’re all fucked. It helps to remember that.” –George Carlin
Short answer, yes Virginia, you should worry about those bank writedowns. Let’s do the numbers using what numbers we have at hand, and extrapolate where we might be if UBS’s economists are right:
Writedowns Thus Far (Source: Bank Implode-O-Meter)
Citibank: 36.6 B
UBS: 19.2 B
Merrill Lynch: 19.4 B
HSBC: 26.5 B
Morgan Stanley: 13.8 B
AIG: 11.1 B
TOTAL WRITEDOWNS THUS FAR: 126.6 Billion Dollars
Market Cap, (Source: Marketwatch)
Citibank: 120.21 B
UBS: 67.03 B
Merrill Lynch: 47.13 B
HSBC: 187.18 B
Morgan Stanley: 45.93 B
AIG: 117.77 B
TOTAL MARKET CAP: 585.55 Billion Dollars
Given UBS’s economists’ estimations that the total flush will be $600 billion dollars, and that $200 has already been written down thus far (e.g., 1/3 of the total of $600 billion if they are to be believed), and past performance by the above institutions (past performance is not a guarantee of future returns, ahem), we can extrapolate what the institutions’ further writedowns may look like—they would be double the previous writedowns above—and how that would affect their market capitalization. (This may or may not actually come to pass but looks to me like it may well do so):
Citibank: 73.2 B
UBS: 38.4 B
Merrill Lynch: 38.8 B
HSBC: 53 B
Morgan Stanley: 27.6 B
AIG: 22.2 B
TOTAL FUTURE EXTRAPOLATED ESTIMATED WRITEDOWNS: 253.2 B
Final Market Cap:
Citibank: 47.01
UBS: 28.63
Merrill Lynch: 8.33
HSBC: 134.18
Morgan Stanley: 18.33
AIG: 95.57
I can’t think of a reason why UBS’s economists wouldn’t want their estimates to be on the conservative side, meaning that the losses could be larger. Given the beating the financials stocks have taken thus far, what would happen to stock prices if investors watched (or even knew about) these institutions opening their veins with cumulative writedowns of another $253 Billion? Add to that (if it isn’t already—this is clearly sloppy, back-of-the envelope guesstimating) credit card defaults ($Trillions), Commercial Real Estate defaults ($ More billions), Credit Default Swaps ($Crazy Trillions), we have quite a mess on our hands.
Did you see the joint press conference with Treasury Secretary Paulson and President George Bush? They’d intended to inspire confidence, but there’s a reason they looked ashen, shaky, panick-stricken, and hung-over.
The way the banking system is so intertwined, if one of the big banks gives up the ghost, it may well set off a cascade/panic, rolling up many/all of the other banks. Thought you’d like to know.
Cheerio!
My own list of troubles comprised 714B, not counting credit default swaps(Gross from Pimco says these will run 250B). I probably double counted something because news wires are some what vague; they don’t produce nice neat tables. So the academics you cite are close.
If I am counting it right, the total capital of world banks can’t be much more than 2T. There are some major problems with real estate in Spain, Britain and Ireland. There are also LBO loans throughout Europe that are barely being funded by the indebted enterprises. The Chinese loan situation is, at best, murky and large. You’ll never see a good table for it. The Japanese banks are speculated to own a lot of bad paper.
The credit crisis will reach farther and wider than our shores.
A very nice compendium of trouble you have put together.
Life insurance companies also have a lot of paper. Duration matching is quite tricky in circumstance like these. There may be some policy holders who won’t plant roses on their graves.
In addition, the PBGC is doing really dumb things:
Bush Deficit at Record as Treasuries Deter Pensions
March 3 (Bloomberg) — Philadelphia’s $4 billion pension deficit is causing the city’s retirement-fund manager to shun Treasuries at a time when the Bush administration needs him most.
Yields on 30-year U.S. bonds that fell to a record low of 4.10 percent this year are forcing pension funds to favor equities, corporate debt and commodities in an attempt to cover unfunded liabilities and meet return objectives of about 8 percent. Even the federal government’s own Pension Benefit Guaranty Corp. said on Feb. 19 that it plans to shift $15 billion to stocks from debt.
“The reality is there’s not a lot we can do” other than buy high-risk securities to close a pension shortfall in a short period, said Chris McDonough, chief investment officer of the Philadelphia Pensions Department. The sixth-largest U.S. city will probably also issue debt, he said.
Fixed-income holdings at 1,100 funds fell to 23 percent in 2006 from 27 percent in 2003, said Dev Clifford, a consultant at financial market research firm Greenwich Associates in Greenwich, Connecticut. Results of a survey covering 2007 will be released this month and likely show that funds own an even smaller percentage of bonds, he said.
Philadelphia’s predicament couldn’t come at a worse time for George W. Bush, whose administration forecasts a $410 billion budget deficit for this fiscal year ending Sept. 30, approaching the record of $413 billion set in 2004. The figure may eventually reach as much as $800 billion, according to Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co. in Newport Beach, California.
http://www.bloomberg.com/apps/news?pid=20601109&sid=a6fTHIHgTnqs&refer=exclusive
http://mauberly.blogspot.com/
We could look at this systemic risk problem two ways.
First is systemic risk in its end stage: “Oh my gosh, Bank X is no longer around to pay me what they owe, and if they don’t, I’m out of business!”
Then there is the transmission mechanism of systemic risk, operating as problems develop: “If Bank X is writing down the securities that I own, then I must do so too by the rules of accounting.”
Mark to market accounting requires each player to seek out the fairest public price for any asset subject to such accounting. If Bank X is desperate to sell anything it can, it will be willing to let assets go for pennies on the dollar. No wonder then that everyone else in the system is stuck with billions of losses when they have to price their holdings of these assets for pennies on the dollar as well.
It’s this second element of systemic risk we have been witnessing since July last year. It’s a slow death version of the first circumstance.
The root cause of the problem is corruption in our overseer and regulatory agencies. The outcome of the whole thing was pretty easy to foretell–certainly quite a number of people saw it coming, just as they could see the dot-com crash approaching.
Why is it considered just a minor character flaw to play “last one out of the pool” with the nation’s wealth instead of a hanging offense?
There’s ample evidence that excessive corruption acts as a brake on any nation’s economy. Russia and Saudi Arabia may have lots of oil and be raking the money in now, but eventually, keeping corrupt leaders in charge results in civil unrest with really terrible consequences.
The regulators turned their gaze aside as corruption infested almost all aspects of the mortgage process in the U.S. At the Fed, the policy was driven by Greenspan’s almost religious belief in the power of the markets to cure all problems. In any event, the Fed only regulated some member banks; others were regulated by the OCC. Nobody regulated the mortgage brokers, lawyers, appraisers, and real estate agents. The SEC completely ignored the growing risks in the securitization process managed by the Wall Street banks.
All of these failures were perhaps a corruption of character in the regulatory community, but outright corruption such as bribes among the regulators I have not heard about.
Jon Stewart may have something to say about the Paulson/Bush press conference. I’ve read similar comments that this presentation was disturbing because both men looked like someone had given them very bad news. On the other hand, it is hard to believe anyone would have the temerity to tell Bush a recession is here, much less describe to him the severity of the economic “slowdown” that is about to hit. Maybe Bush had just had another bad run-in with a pretzel.
Most people don’t even know(or care) how compounding works, so they don’t know how fast their credit card balance will double over a period of time, given the rate they are being charged.
The banks like it that way; that’s how they make their money. The schools make money teaching useless tripe. They don’t teach much in the way of financial planning, which is easy, simple s**t. But to teach it you have to impart a kind of judgment and we don’t like judgment much, except that which is adventitiously in our favor or disfavors whom we don’t like.
The regulators protect the banks, while the schools don’t educate the borrower. That way we buy stuff without regard to what it costs. Make no mistake: that’s the way we want it. We are the corrupt ones.
It does seem the worlds economy has become the thin skin of a large bag of flammable financial gas.
I do think the only long term solution will be for society to recognize money is a form of public utility, like the roads. As private property, the desire to accumulate is much greater then any economy can conceivably use. When the basic concept is instilled in the entire society that its currency is a form of public property, the very notion of hoarding large amounts of it would not only be meaningless, but counterproductive, since it couldn’t be flaunted and instead of bringing respect, would brand one a thief of the larger good. Wealth is a product of communal effort and we really do rise and fall together, even if on personal levels it seems the opposite is true. If people couldn’t express their ego in terms of accumulating abstract wealth, then they would naturally find other outlets, many of which would serve to improve the community and environment, while the wealth would be used to provide health, education and infrastructure. This would result in a society that has faith in itself and not just in its currency, so that many of those aspects of society which currently require constant supervision, might function without it and still be reliable and efficient. The irony here is that society would truly respect its currency and not feel it is sullied by endless greed for it.
takes over these mortgages at par in something like the HOLC of the 30s? Suppose they put them into the equvalent of a Chinese asset management company like Cinda or Great Wall?
http://mauberly.blogspot.com/