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Bloomberg's Editorial On MBS Failures; entered at 2012-04-30 10:02:25

Grashopa
Posts: 2609
Registered: 2009-02-03

Quote:

Let's further say that the market value of the house (that is, the immediate liquidation price, should it be required, is $80,000.)

This doesn't actually fix anything since the banks WERE lending to the market price - its just that anyone could get a loan so there was a lot of demand hence higher prices. You must still limit leverage. Every loan is an increase in the money supply, the more loans the higher prices go.

2012-04-30 10:02:25


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