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« The TARP Debate | Main | Investing in 2009 »

January 16, 2009



Jeffrey - Your comments are always interesting and helpful. You have stated quite effectively some of the major arguments made by M2M proponents, as has David Merkel. I also have some good emails. I am going to try to pull these arguments together and address as an article, rather than a reply.

As to the "gotcha" question (that I am also seeing pop up on CNBC), I am indeed looking for the best ways to invest in these securities. It is not as easy as your question implies, especially for those who are not accredited investors.

Thanks again for taking the time for a thoughtful comment.


Jeffrey Levin


You did a piece the other day defending the BLS stats guys. Well - i am here now to defend the accountants. Everyone seems to want to blame mark-to accounting for the problems. If no mark-to, then all the problems go away.

The real problem isn't mark-to. Where is the commentary on firms who were using 45 to 1 leverage, using funding in the form of overnight repos no less to acquire these assets. No mention of that problem here - only the accountants. But these were long-term assets is the argument i hear over and over. Yet everyone seems to gloss over that if they were long-term assets, why were they funded using 7 day commercial paper?

Image a world in which no mark-to had been in place. What was the difference between 1987 and 1991 for S&L's. The S&L's were just as insolvent in 1987 as they were in 1991. There was none - it just took us longer to realize it.

Here is my last argument - If these assets that were the subject of the marks are such wonderful assets - assets that should never have been written down even though they are all showed as available for sale WHY ARE YOU NOT BUYING THEM IN YOUR PERSONAL PORTFOLIO AND RECCOMENDING THEM TO EVERYONE ONE OF YOUR PORTFOLIOS. THESE ASSETS ARE ALL AVAILABLE FOR SALE - WHY HAVEN'T YOU SCOOPED THEM UP?

If you really believe what you are saying in these articles, put your money where your mouth is and show us that you are reccomending them to all your clients

Kind Regards

Jeffrey Levin


A more favorable possibility might be to keep the accounting but relax the regulatory compliance standards. Accountants happy, banks happy.

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