Quote:
Originally Posted by sgtclub
It is supposed to bring liquidity to the market place and lower long term interest rates.
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...The most common form of long term interest being mortgages. And the idea is people with mortgages can refinance and the cash flow freed up will go into consumption.
Except for this problem: Banks can't refi an asset worth less than the remainder outstanding on the note. The debt has to reset to the fair market value of the asset, and that reset can only occur via foreclosure sale and repurchase by a third party at lower cost, with a smaller mortgage, or a principal write down. The latter is not happening.
