Market Seems Confused About Definition of "Mortgage Subsidies"

Another insane rally for all the wrong reasons. Mortgage subsidies are an effective debt reorganization, and confirmation of a lack of equity value. LACK, not ABUNDANCE. To be buying stocks on this news one has to believe that the value taken away from equity tranches, taxpayers and through incremental leverage, will be lower than the value generated by subprime borrowers who will go forth and purchase/borrow thanks to having a subsidized home (for a few months at least, until they lever themselves into the outhouse yet again). In the mean time second liens and equity tranches of that same mortgage get wiped out, spilling over into capital markets.

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