When they have a $30,000 house, they are now mortgaging for $250,000 – what is the real value of that mortgage’s principle?

“Whatever standard is in play – must be an honest and genuine representation of current value.” – cricketdiane

Didn’t the “mark to market” rule come out of an international demand for accountability? Didn’t they say the US was trading in financial instruments that were being misrepresented in value and unnaturally inflated in values?

Wasn’t it the case that before the “mark to market” ruling, these securities were being assigned arbitrary values which bore no reflection of reality? Isn’t it the case that bankers and financial institutions want to re-establish the manner of doing it before the asset classes were required to be valued in realistic terms?

If a mortgage or bond is of a specific value at maturity (with interest and principle combined), it is faulty to assume that amount as its true value for the purposes of trade and leverage. This practice had inflated values, especially in the case of use as collateral against borrowed capital. Once in default, these assets were not representative of any real value that could be acquired upon further liquidation.

When mark to market was brought into play, it forced the banks, investment houses, financial institutions and other businesses to establish across the board, the same exposition of value which could accommodate fluctuation with current market conditions. It is fair to the lender, fair to the borrower, fair to the investors and relates an expected value, if and when the asset reverts in the case and occurrence of loan depositions and re-packaging / trades. If it has no real market value, the purchasers, investors, companies and foreign institutions have a right to know.

The underlying principle of these mortgages, bonds and financial derivative products / credit derivative products have also not maintained value regardless of the value adjusted for current and specific currency rates, deflation / inflation factors, market erosion, trading values, and other variances.

Competence and fairness in these markets, specifically concerning the tangible and realistic values of assets are required by the international community and must be by the US, as well. Otherwise, it will collapse under the weight of its own fraudulent practices and we will not be a market any longer.

Written by Cricket Diane C “Sparky” Phillips, 09-28-08, USA