re: "Mark To Make Believe"

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they were allowed to have level 3 assets and mark them to a model. They SHOULD have been marking them to market every day and posting collateral as necessary.

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LINK

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What Does Level 3 Assets Mean? Assets whose fair value cannot be determined by using observable measures, such as market prices or models. Level 3 assets are typically very illiquid, and fair values can only be calculated using estimates or risk-adjusted value ranges.

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Maybe I'm just tired from jet-lag, but I think you're talking in circles, Colonel. It's like you're saying, "They should be marking them to market because they can't mark them to market because they are Level 3 assets which means they are assets whose fair value cannot be determined by using observable measures, such as market prices or models."

ETA:

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they'd have been forced to sell their shite paper before things really got bad.

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Again, circular logic: if they all were forced to sell at the same time, then that in itself would result in things getting really bad.