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This morning, on CNBCʼs Squawk Box, I discussed what further actions the Fed could take to ease the financial crisis. View the video here.
One Response to “What will the Fed do next?”
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November 26th, 2008 at 4:56 pm
I am a Physics major not a Finance major so I may be asking a dumb question. Would you please comment on why “mark to market” is not limited to securities on broad, publicly-traded exchanges and why other classes of “fixed-income” oriented assets with limited “over the counter” markets should not be evaluated based on the higher of a model (based on analysis of risk and current income compared to treasuries, the lowest risk income oriented security) or their market.
It seems to me that marking things to market when there is no market is, at best, confusing and is causing a lot of unnecessary stress on the banking sector. It seems rather like declaring a ten carat perfect diamond worthless because it is midnight and the pawnshop is closed at the moment. If thrown away, I’d pick it up and wait for sunrise … seems like that is what someone is doing with the big investment bank assets. And they are even getting a free government blanket to keep warm until morning.
Am I missing something or are Paulson’s buddies getting special treatment?