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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: MulhollandDrive who wrote (166934)11/24/2008 6:14:30 PM
From: ChanceIsRead Replies (2) of 306849
 
once politicians realize just how much of a subsidy is not going to helping consumers, businesses, the real economy, and how much of it is really going to the virtual speculative economy, we’re going to have a very interesting political debate in this country.

Above quotation from Chris Whalen from the same conference. Whalen is one of my favorite oracles these days. If I understand him correctly, he is pointing out the notion that when somebody like Citi wrote a credit default swap......took an insurance premium against some piece of debt somewhere going bad......and the loan goes south, Citi incurs an obligation to make good on the loan. Now if Treasury keeps sending them clownbux, and the clownbux keep going to satisfy all of these increasingly sour CDS obligations, then there will be no clownbux left to lend to businesses. J6P ain't happy about the printing of the clownbux, but he thinks it is going to lend to keep the wheels of commerce going. Wait until he finds out that it is going to satisfy casino obligations laid down six years ago. Where will that money go??? To the hedge funds who bought the CDO no doubt. That may not be such a bad thing. The hedge funds probably know how to invest it better than Uncle Sam or J6P. Of course Cerberus did buy Chrysler, so you can throw my argument right out the window.

Great AEI conference. all should take it in.

Transcript:

aei.org

Video:

app2.capitalreach.com
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