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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (108369)	2/16/2010 8:23:31 PM
From: rich evans	Respond to of 116555

The FED and the Treasury were doing everything possible to prevent a financial collapse. So yes , your basic statements are correct but they were negotiated as part of the Bear Sterns rescue. JP MORGAN did not and could not take the risk of the 30 bill of mortgage securitiesl on Bears Book . So if the Government wanted them to do a deal , they had to step up and take the risk . And they can wait forever to see the results and what the default rates and severity ratios are since they have no capital requriements as the FED. OK , you are right, they put lipstick on this pig, but what were the alternatives. Collapse? Look what Lehman failure caused? Bear was much bigger. Hurray for the Lipstick. The Fed can absorb any losses much better then any other institution and they can be patient and wait. Mark to Market means nothing to them. They can wait and see. Rick