Conspiracy of silence
Didn’t I claim to be a optimist??
This is a great article in the Guardian…
Here’s an excerpt:
“It’s back to game theory. It is in everyone’s interests to sell, but the danger is that you spark a collapse that means you lose more on the debt you retain than the debt you sell. The alternative is to sit on it and hope for better times. It’s almost a conspiracy of silence. But no one can think of a better idea,” said one analyst.
To the banks it is not just a paper money problem; many of the empty homes they have repossessed are now sitting directly on their books. There are districts in Orange County, across Florida and many other parts of the US where they own hundreds of homes. Congress is beginning to ask if keeping these homes empty is the best policy. Shouldn’t they be sold and families move in? If that happened, the very real losses on selling homes would again leave large holes in the banks’ accounts. Worse, it might cause a collapse in confidence in the housing market, with all the implications that flow from falling prices and negative equity.
It’s one thing to sit on hundreds of positions in CDOs trying to wait for things to blow over before marking to market, but it’s an entirely different thing to sit on hundreds of vacant houses breeding mosquitoes in abandoned swimming pools in relatively concentrated neighborhoods.
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