CONCERN OR DESPERATION?
McCain's new strategy, his latest "erratic-ca", apparently, is to flank Obama ... from the Left.
McCain's campaign wants to buy up / refinance mortgages (McCain himself has probably never paid a mortgage, I'd guess). This isn't unlike what some non-hold-your-nose liberals wanted from the outset, something akin to the Depression era Home Owner's Loan Corporation.
"More capital" is on the list of things-to-do, but it may not be the first or the best thing.
Yes, it could be overkill, but I rather support this approach, albeit in a far more targeted fashion. It would have to be limited to *some* sub-prime and alt-a loans with ridiculous step-up rates and, possibly, defaults on some prime loans.Nothing - nothing - on commercial real-estate, whole loans, and a slew of other securities for which the government has no business or competence, IMHO, to get involved with as a matter of public policy. It was ... misguided to give the Treasury secretary the right to buy anything.
Also, it was misguided to give the Treasury Secretary the right to buy up mortgages at face, rather than offer a discount only for them, to force the Treasury to share the burden with both lenders and borrowers, so to speak.
EQUITY IS THE ANSWER? FINDING OTHER FORCE MULTIPLIERS
There are some who are very, very keen on injecting capital ... as a way to restore confidence?
"More capital" is on the list of things-to-do, but it may not be the first or the best thing.
It really, really depends on the problem one is trying to solve, the root cause of the loss of confidence. People need valuation certainty, liquidity (risk-management), and transparency to risks ... think of these as "force multipliers" that will stretch even a small amount of capital a long way.
What's more, I don't particularly like the government with large amounts of equity for any prolonged period of time. My objections have more to do with the inability of politicians to keep from meddling and the potential for corruption, than any objection in principle to collective ownership.
