The housing disaster’s most important proximate cause is bad loans. One cause of that is the house price falling below the loan value. Loans were made on expectations of a continuing bubble of house prices rising, but instead they fell. Mark to market worries many, but it should not. Mark to market accounting requires writedowns of assets that have lost value. The stock market mostly knows and/or estimates such losses even if the banks do not mark to market. Postponing mark to market won’t change the market value losses or the bad loans. Eventually a mark to market has to … Continue reading Mark to market not a villain