Mark to Markit?

The Economist has an excellent article identifying flaws with mark-to-market accounting which prices securities against illiquid, small indexes such as ‘Markit’ during periods of turmoil. It remains a distinct possibility that we could have massive ‘write-ups’ down the road as this turmoil is resolved in the future. The point is, these are not operating losses. These are accounting losses based on illiquid market prices and massive selling (supply) into limited buyers (demand). Several valid points are made and it is a must read.

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