Via Mark Thoma, Susan Woodward has an idea:
The true values of mortgage assets are generally thought to be a mystery. But
little-mentioned among discussions … of the crisis is that the Treasury has
access to the best resources in the business for estimating the hold-to-maturity
values of mortgages and mortgage-backed securities. This team is at Fannie Mae,
which the government now effectively directs.
You might laugh, or cry, but the reality is that most proposed paths out of the crisis involve a circularity problem. And, courtesy of Chris Masse, here is another paragraph to ponder:
Krugman’s award could bring Bush face-to-face with his
antagonist. The president typically invites Nobel Prize winners
to the White House in November or December.
Nice dramatics, but the answer remains…. scrap FAS 157.
Hey Tyler – are you going to hire the guy? He’s got an interesting resume.
Seems like it should be easy to figure out value of mortgages, but if I read “The Panic of 2007″ correctly, the problem is that there is a veil between the securitized investments and the underlying mortgages that cannot easily be drawn aside.
John: Gore did at least. I remember reading the articles about his visit. (Apparently they were cordial in public and had a little half-hour chat in the Oval Office or something.)
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