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	<title>Comments on: BoE votes for mark-to-model</title>
	<link>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/</link>
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	<pubDate>Mon, 08 Sep 2008 09:37:35 +0000</pubDate>
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		<title>by: PrefBlog &#187; Blog Archive &#187; Bank of England Financial Stability Report: April 2008</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-20404</link>
		<pubDate>Mon, 12 May 2008 19:48:03 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-20404</guid>
					<description><![CDATA[[...] More extracts with light commentary are provided by FTAlphaville. [...]]]></description>
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		<title>by: Anonymous</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19582</link>
		<pubDate>Fri, 02 May 2008 03:23:38 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19582</guid>
					<description><![CDATA[What planet is BoE on with this nonsense:
"Mortgage default does not necessarily imply real losses because a house that is transferred from one owner (a household) to another (a bank) in perfect condition at a lower price does not necessarily cause any reduction in the flow of economic benefits."

In those U.S. markets where housing prices are falling and will continue to fall for another year at least, a mortgage default is a real loss. To think otherwise is nonsensical, and a denial of the time value of money or assets. Since when does transferring a house from one owner to a bank "at a lower price" not reduce economic benefits?]]></description>
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		<title>by: Anonymous</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19556</link>
		<pubDate>Thu, 01 May 2008 16:39:50 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19556</guid>
					<description><![CDATA[Personally, I think the problem is the Bank has to figure out how to constantly value the SLS collateral without engendering further issues and is finding that task rather daunting.  Hence, the desire to rely on models. Needless to say, that's part of what got us here in the first place.   Reading these carefully parsed phrases, I can't help but be reminded of the 90's comedy "Yes Minister."]]></description>
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		<title>by: Research Recap &#187; Blog Archive &#187; BoE says Marking to Market Overstates Subprime Losses</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19550</link>
		<pubDate>Thu, 01 May 2008 14:42:35 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19550</guid>
					<description><![CDATA[[...] FT Alphaville provides further analysis of the Bank’s report. [...]]]></description>
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		<title>by: PhilA</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19544</link>
		<pubDate>Thu, 01 May 2008 12:22:05 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19544</guid>
					<description><![CDATA[Granted.

Not all the predictions of large final losses are using the ABX as a base, so complaining that the ABX is out of whack & then positing a model of future defaults based on past default rates as being the 'true value' might be putting the cart before the horse: If the market doesn't believe that those past default rates have predictive value any more, then the ABX may be relecting that lack of faith rather than any price dislocation due to liquidity issues.]]></description>
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		<title>by: D Clark</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19543</link>
		<pubDate>Thu, 01 May 2008 12:03:40 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19543</guid>
					<description><![CDATA[The point is that the ABX index, like any non-deliverable index, can be distorted when participants rush to short it to hedge their positions. Cash and carry traders will find it hard to arbitrage particularly when market liquidity dries up. Perhaps it needs some redesigning.]]></description>
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		<title>by: PhilA</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19542</link>
		<pubDate>Thu, 01 May 2008 11:50:34 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19542</guid>
					<description><![CDATA[Quite. Oh, and as per my comment on the earlier post, they appear to be using historical US default rates to model the expected future losses. I personally do not believe that these are going to apply going forward: the US has never had a nationwide fall in nominal house prices since records began & home owners who are in negative equity can walk away without direct penalty in many states, including Califormia where the mismatch between house prices and fundamentals was huge.

For people who've bought a house with no money down (100% mortgages) & where house prices around them have already fallen 30% with no sign of stopping, then the temptation to just walk away and start over must be very strong, especially if they can cut their housing costs in half (by renting at market rates rather than paying the mortgage) as a result.

See http://www.youwalkaway.com/ for the gory details. It's not going to be pretty.]]></description>
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		<title>by: JP</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19392</link>
		<pubDate>Thu, 01 May 2008 09:43:12 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19392</guid>
					<description><![CDATA[Maybe the Bank should suggest to the Government that it move to 'Level 3' counting of election results in order to curb excessive volatility in election results. the government should simply make a poll based on what it though voters might actually vote in an election and simply mark all ballot papers to that model.]]></description>
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		<title>by: PC</title>
		<link>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19391</link>
		<pubDate>Thu, 01 May 2008 09:41:03 +0000</pubDate>
		<guid>http://ftalphaville.ft.com/blog/2008/05/01/12744/boe-votes-for-mark-to-model/#comment-19391</guid>
					<description><![CDATA[The inflections in Chart A are still in the future for all tranches. The cynic in me still sees the hand of the wishful thinking statistician...]]></description>
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