The latest news---a very small item in the Times, easily overlooked---concerned a pending ruling from the Financial Accounting Standards Board about the valuation methods banks will now be able to use to value the toxic assets, among other assets, on their balance sheets. The 'mark to market' method will be set aside in favor of methods that use sophisticated financial models to determine what the value of impaired assets 'might be' in a more 'normal' trading environment.
Fantasyland.
Let's pretend the money center banks are not insolvent---which they essentially are--and let's pretend that assets will now be valued as they might be worth if only 'normal' market conditions prevailed. Hmm, is that like saying I can borrow against the year-ago value of my west side co-op? Yippee!!---it's back to business class airfares for me! And all the Merrell shoes I can schlep home. Need a new tennis racquet too, and that Armani suit I've been eyeing on Madison......ahhhh.....
Hey, wait a minute! Isn't this how we got into the Catastrophe in the first place?
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