Tuesday, March 24, 2009

Internet Fight!

And it's about the ever scintillating topic known as: The True Value of Mortgage Backed Securities! In this corner we have BooMan, who claims that there are lots of signs that the targets of Geither's plan are worth more than Krugman and Atrios give credit for... and in the other corner we have Duncan Black, aka Atrios, who basically just evades and doesn't address any of the central points of the argument.

I happen to agree with BooMan, as you might have noticed, but there is a fairly legit criticism based on the fact that we're only talking about a subset of "the shitpile"... and that's the one made by Krugman in this interview... that this isn't going to be enough; that undervalued assets certainly exist but that they're a small part of the total problem. He argues that we're going to subsidize all these bets, and at the end of it the banks will still be underwater. I think that's a real possibility, but I think it's a feature not a bug.