AEIdeas

The public policy blog of the American Enterprise Institute

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Discussion: (1 comment)

  1. Max Planck

    From what I saw in the regulatory blogs I follow, this was indeed a wise compromise at the right time.

    “1. I understand the logic in wanting to break the sovereign debt loop — banks get in trouble by holding too many bonds of their cash-strapped governments, government borrows to bail them out, sovereign prices fall further, banks gets in more trouble — but doesn’t this lessen one possible check on government borrowing?”

    No, and I don’t see how you come that conclusion.

    In addition, one has to compare the risks of MBS’s compared to some sovereign’s like Greece’s.

    I’ll take the MBS,’ thanks. The flexibility shown here was wise judgment. Well done.

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