Btw, anecdotal as it is, I work with realtors & their abandoned properties regularly. Expensive homes, gated communities, N. Scottsdale, stripped (in a hurry – as in demolished) of all appliances, including swimming pool equipment. If the vandals who were listed on the mortgage left anything, like copper plumbing, a second wave is likely to scavenge that. The bubble valuations were bad enough, these damages add tens of thousands of dollars…none of this is getting marked to market, none of this inventory is moving, & nothing that’s being done will rectify this (including gov “bids”, which is actually an oxymoron – anti-bid would be better term).

Black Swan is raping Golden Goose; the progeny will be vicious.

But the point is the lesson for auction market theory – that without a free market auction – markets don’t work. With a very limited number of traders in the CDO etc market, it was easy for them all to drop their hands and go NO BID at the same moment… in fact, right after word of BSC trying to unwind some of these assets. The dominoes just started falling and haven’t stopped. Sooner or later this current US administration will bid. Mark my word.

Now, take a bunch of those bankrupt, or soon to be bankrupt ‘assets’, spun from politically correct nothingness [see CRA - Community Reinvestment Act], slap on a thin topcoat of GSE, for apparent legitimacy, respectability, ‘securitize’ them…since the minimum standards & quality requirements necessary to commodify them, let alone qualify them as real things, assets, are absent, & they are not fit to be exchange traded (by design) – they are not real products, after all, just figments of fevered imaginations – it had to unwind exactly as it did, is doing. The r/e is not the asset, it is the collateral for the asset, which is the mortgage itself – a kind of bond, & in this case, banana republic bonds. It may be possible to construct an exchange traded contract for such dreck, it may even survive birth, but beyond adding another layer of insult to an already mortal injury, what would be the point?

Does a nationalized mortgage industry, banking industry really qualify as as “a human somewhere willing to pay something for the asset”? Or as a legitimate bid in a legitimate auction?