Word: pricing
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...risk by financing three-quarters of the purchase. Therefore, Lone Star had limited risk, which is similar to the way funds would have limited risk buying bad securities with government backing. But the most important part of the deal was not Lone Star's risk; it was the price. Lone Star paid 22 cents on the dollar. This means that Merrill Lynch had priced its asset-backed securities somewhere around 22% of their original value...
...trickle-down solutions: dealing with complicated assets like mortgage-based securities in the hopes of stabilizing the values of more concrete assets, like homes. In contrast, my approach addresses the root of the problem. Thus the government would help ensure that the mortgage-based securities find a stable price via the trickle-up effect. After all, it would take an inconceivable number of foreclosures at 70% of principal to justify the assets' trading down to 22% of their face value...
...This plan costs the government - and the U.S. taxpayer - only a trivial amount, the operating costs. Again, it is nowhere near as complex as what the government has done so far. It carries a small price tag compared with the massive, mostly ineffectual spending that has been the basis of the current policies. (See pictures of the global financial crisis...
Ideas aimed at kick-starting this process include giving everyone who buys a house a tax credit worth 10% of the purchase price and driving down mortgage rates--perhaps to as low as 4%. They're an effort to push fence sitters off their perch and give a head start to folks who are finding that tighter lending standards mean they can't borrow as much as they might once have...
...cold fury among mainstream Israelis who had given Gaza back to the Palestinians only to find it ruled by Hamas, armed by Iran and lobbing missiles across the border on a daily basis. "We have to crush terror and eliminate Hamas," Lieberman said on election night, laying out his price for joining any coalition. "There can be no cease-fire with Hamas. There can be no negotiations, direct or indirect...