"Larry Jaques" wrote in message
...
On Sun, 23 Mar 2008 15:54:25 -0400, with neither quill nor qualm, "Ed
Huntress" quickly quoth:


"Larry Jaques" wrote in message
. ..

I haven't spent any time yet looking deeper into the housing market
FUBAR and am looking forward to your reply about why lenders are
foreclosing vs. keeping some money flowing in and rewriting all the
mortgage contracts to standard. If it wasn't the mortgage loan folks'
money, why aren't the actual lenders being smarter about refi? Massive
repos and recessions cause all their properties to decline in value.

Firstly, the ultimate lenders aren't looking at the mortgages. They may
not
even know that mortgages are behind these bonds/credit
swaps/collateralized
investment vehicles, and the tangled web is too far removed from the
mortgages themselves to be able to go back to the borrowers. They're
looking
at the possibility of the paper they're holding collapsing entirely
because
someone made a margin call that can't be met, with the whole house of
cards
falling because of a default and the resulting bankrupcy.

I had to google "margin call". I think I learned about it I way back
in Civics class in high school and haven't needed it since.

That's good. People who worry about margin calls are people who live with a
lot of life-shortening stress.



If this thing were as rational as you propose there would be no problem.
But
panic has set in, and the creditors are trying to get what they can as
fast
as they can. The bailouts are intended to calm these panics and the runs
on
the investment banks.

OK, got it.


Go to today's NYT home page. The story "What Created This Monster" is on
the
front page.

Drat, NYT threw away my identity. I re-registered and will read that
article now. Wow, 6 pages? It's a biggie!

And it's not bad. But the Economist stuff this week is better. If you want
I'll see if I can e-mail you the article(s). It's 10 pages of print.

--
Ed Huntress