2008-03-12economyincrisis.org

We strongly disagree with Mr. Paul Craig Robert's conclusions and assumptions, but submitted for your consideration anyway.

Our position is that suspending mark-to-market would just suspend honest valuation, and at best, put us right back where we were immediately before the collapse.

There's nothing wrong with mark-to-market -- anyone who trades leveraged on margin is continuously subject to instantaneous valuation discipline and the threat of margin calls, all according to mark-to-market. THIS KEEPS TRADERS IN LINE AND MAINTAINS THE SOLVENCY OF THE EXCHANGE.

So why does Roberts think banks (also highly leveraged, well ove 10:1) should be exempt? Does he think keeping banks' trades in line, and maintaining the solvency of the financial system are non-issues?

Indeed, exempting banks from mark-to-market was essentially the genesis of today's problems, especially given the backdrop of little to no reserves relative to outsized positions.

Instead it looks to us like Roberts is making panicky arguments for more stopgaps to paper over the mess, hearking back to the unsound status quo of the last 20 years, rather than solving the fundamental problems.


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