{"id":385,"date":"2009-05-31T22:24:11","date_gmt":"2009-06-01T05:24:11","guid":{"rendered":"http:\/\/blogs.law.harvard.edu\/cqtwo\/?p=385"},"modified":"2009-05-31T22:24:11","modified_gmt":"2009-06-01T05:24:11","slug":"tranche-makes-me-blanche","status":"publish","type":"post","link":"https:\/\/archive.blogs.harvard.edu\/cqtwo\/2009\/05\/31\/tranche-makes-me-blanche\/","title":{"rendered":"Tranche makes me blanche"},"content":{"rendered":"<p>From <em>The Economist<\/em>, 3 January 2009:<\/p>\n<blockquote><p>The second feature of the Danish system is that mortgage-holders can also buy the bonds in the market and use them to redeem their mortgages.\u00a0 This is useful if a rise in trest rates (or a fall in house prices) causes mortgage-backed bonds to trade at a discount.\u00a0 Redeeming their bonds allows homeowners to reduce the amount they owe.\u00a0 <strong>In America, for instance, mortgage-backed securities have fallen far below their fundamental value in thinly traded markets, partly because the people who would benefit most from buying them have no mechanism to do so. <\/strong> &#8220;Everybody can buy that bond at a discount except that one guy who is most involved with the loan, the homeowner,&#8221; says Alan Boyce, a mortgage expert who has worked with George Soros, an investor and philanthropist, on promoting the Danish model in emerging markets.\u00a0 In Denmark, by contrast, a fall in the value of mortgage bonds usually encourages homeowners to snap them up to redeem their own mortgages, as is happening now.<\/p><\/blockquote>\n<p>Seriously: Do not trust anyone who uses the term &#8220;tranche.&#8221;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>From The Economist, 3 January 2009: The second feature of the Danish system is that mortgage-holders can also buy the bonds in the market and use them to redeem their mortgages.\u00a0 This is useful if a rise in trest rates &hellip; <a href=\"https:\/\/archive.blogs.harvard.edu\/cqtwo\/2009\/05\/31\/tranche-makes-me-blanche\/\">Continue reading <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":1116,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[96],"tags":[],"class_list":["post-385","post","type-post","status-publish","format-standard","hentry","category-politics"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p8jQA6-6d","_links":{"self":[{"href":"https:\/\/archive.blogs.harvard.edu\/cqtwo\/wp-json\/wp\/v2\/posts\/385","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/archive.blogs.harvard.edu\/cqtwo\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/archive.blogs.harvard.edu\/cqtwo\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/cqtwo\/wp-json\/wp\/v2\/users\/1116"}],"replies":[{"embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/cqtwo\/wp-json\/wp\/v2\/comments?post=385"}],"version-history":[{"count":1,"href":"https:\/\/archive.blogs.harvard.edu\/cqtwo\/wp-json\/wp\/v2\/posts\/385\/revisions"}],"predecessor-version":[{"id":386,"href":"https:\/\/archive.blogs.harvard.edu\/cqtwo\/wp-json\/wp\/v2\/posts\/385\/revisions\/386"}],"wp:attachment":[{"href":"https:\/\/archive.blogs.harvard.edu\/cqtwo\/wp-json\/wp\/v2\/media?parent=385"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/cqtwo\/wp-json\/wp\/v2\/categories?post=385"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/archive.blogs.harvard.edu\/cqtwo\/wp-json\/wp\/v2\/tags?post=385"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}