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Originally Posted by hi_im_god
i've seen a couple of posts on mark to market.
here's my question: if you believe the market is the best way to fairly value assets, what's the current free market argument against mark to market?
if odd accountancy rules are needed to make sure our larger financial institutions remain technically solvent aren't we just prolonging the pain by ignoring the fact they don't hold asset's to cover all the deposits?
i'm looking for some of the pure free market, no government interference folks to explain this to me.
and why can't obama solve this with a waive of his magic libtard wand? (<timm: i'm being ironic. don't agree with me.)
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I am not economic expert, but Mark to Market principals are bringing the entire financial system down. A Cash flow method I believe would be more fair. This would value assets based on cash coming in.
The answer to your second question is no. The assets are simply not as bad as the values placed on them because there is no market for them at all. Currently their are no investors to buy Jumbo mortgages at all. The banks that were forced to sell assets due to the de-valuing of the assets sold them at a discount so now other banks need to sell assets at to cover the fact that their assets are now worth less due to the first bank selling at a discount. It is a terrible cycle and there is no end. There is no real $ being lost. Simply put it doesn't work.
The free market would continue to work based on a cash flow method and would still protect investors.
I believe Obama and the dems will actually work with the SEC, the treasury dept, etc to help solve this problem. Again I am not an expert on this and I believe that we can't just switch or stop mark to market overnight, but the current system is failing miserably and hurting everyone from the consumer, the small business owner to the large corporations for no real reason.