Willy Hutton Watch

Will Hutton just a few weeks ago suggested that the solution to the UK\’s mortgage woes was a government backed intermediary, along the lines of Fannie Mae or Freddie Mac.. That would of course stop all these risks of the markets seizing up as mortgage banks went bust.

His timing is of course amazing.

For it looks like Fannie Mae and Freddie Mac will go bust and need a government rescue.

Will Hutton: the near perfect guide to what not to do.

1 thought on “Willy Hutton Watch”

  1. I don’t follow the logic. Both Freddie Mac and Fannie Mae are technically insolvent by a tiny fraction of their total value at this particular point at the end of a big financial bust.

    Does this mean that the system that gave rise to these things is flawed?

    For example, there have been on a number of occasions large corporations which have reached this point – so what happens? They go to the market and sell shares in the market and carry on (and there have been plenty of US investment houses in the recent past that have done precisely this to avoid a cash crunch, or a Bear Stearns like run on the bank)

    Does that make the system wrong?

    And we all know about historic situations where stock markets themselves collapse as asset value collapse and become temporarily less than borrowings or NAVs. Does this mean that stock markets are a bad idea?

    I’m baffled Tim. Help me.

    Tim adds: Hutton’s desire for such organisations was specifically that they wouldn’t go bust thus withdrawing liqudity from said mortgage markets. So, the fact that they might, doing so, obviates his desire for them.

Leave a Reply

Your email address will not be published. Required fields are marked *