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March 26, 2009


I share your degree of "shock" at each party's hypocrisy. With all the hearings pertaining to AIG bonuses (.001% of our problems) and other matters, Congress has gotten more airtime than Dora The Explorer. Unfortunately Dora seems more thoughtful.
I hope the PPIP, or PPIF's, plan cleans up the bank balance sheet and reprices risk into the proper hands. However, I am afraid there are signficant disentives and however publicly we have considered problems with RMBS, as today's WSJ discusses (and detailed in a report from Deutsche Bank last week if you wish), CMBS may be even uglier. 30-60-90 Day delinquencies are comparitively low at 1.8% (9.55% national RMBS) but loss severity may be quite a bit higher. And the problems continue through other bank asset classes.
Like our President, and candidate McCain before him, I have confidence in our economy and society. But our "recovery" will be anemic. Thanks for taking the time to air it out. Inflation - a perennial topic we have discussed - is an entirely different matter.

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