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Right, mortgage defaults lead to losses for the Treasury and therefore some of the contingent equity is realised. Krugman has quoted an estimate that maybe $800bn will be lost on subprime because of the housing slump and that under $500bn of losses has been recognised so far. So nationalisation seems like the eventual, inevitable outcome.

But under the Dodd plans the equity is realised over months or years, and Obama can be blamed for nationalising the banks :-)

Under the Paulson plan, the Tresury simply loses money.

A vivid image of what should exist acts as a surrogate for reality. Pursuit of the image then prevents pursuit of the reality -- John K. Galbraith

by Migeru (migeru at eurotrib dot com) on Wed Sep 24th, 2008 at 06:06:08 PM EST
[ Parent ]
But under the Dodd plans the equity is realised over months or years, and Obama can be blamed for nationalising the banks :-)

So if the economy doesn't run well the next 4 years, because of the mess that is, it will be blamed on Obama's socialism.
Maybe the Dodd plan isn't that bad, as there is a scapegoat to prevent anti-capitalistic spin. I only hope Obama is really elected and the mess doesn't fall McCain on the feet ;-)
Maybe I should change my signiture, but I think by now it are anyhow only the masochists left favouring McCain.

Der Amerikaner ist die Orchidee unter den Menschen
Volker Pispers

by Martin (weiser.mensch(at)googlemail.com) on Wed Sep 24th, 2008 at 06:14:09 PM EST
[ Parent ]

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