Mark to market

The whole issue of mark to market, which is accounting speak for pricing the value of all loans and assets at the current market price rather than the price they went on the books at, is now being recognized as a source of the 2008 financial crisis.

I recognized this almost immediately for two reasons. First, a massive financial movement must require a systemic cause and an accounting change is systemic. Second, I have always considered the financial world to be highly volatile and understood that the sources of volatility can never be anticipated.

Here is a wonderful discussion of the issues of mark to market. If you are interested in this subject you will be interested in this debate. Frankly we have a case where openness and transparency can be in conflict with stability. I think we have gone a little too far in the transparency of assets direction.