Your math sounds fine, but as I understand it, the problem comes from the fact that so many of the bad mortages were sold in bundles along with those that are still performing that no one knows for sure where all the bad loans are located and who’s holding them - thus all packages of loans become suspect and no one wants to accept them as collateral - the key to freeing up the market short of the grand schemes being pushed by the politicians would seem to be tracking each mortgage to separate the good from the bad so that values could be set according to the reality of each loan - shouldn’t be too hard with today’s computer technology, maybe that’s why those who want more government control of the economy are pushing to get this deal done so quickly, before a more precise method of valuing the mortgages can be instituted.......
That’s part of the reason I posted those numbers. The fact is that the market can’t put a value on these assets, so they’re not marketable (current value = $0). If you can’t sell something, its market value is zero. Put a number on it (even artificially as the Fed/Treasury are trying to do) and all of the sudden everyone can do the math.
My point is that my worst case numbers (call them artificial if you want) are better than Fed/Treasury numbers (which definitely ARE artificial).
We are in a panic situation. I’m simply trying to quantify (if that’s possible) how panicked we should be. Doesn’t help when Fed/Treasury do nothing but say “Be afraid. Be VERY afraid!”