"This American Life", from Chicago Public Radio, has an excellent show explaining the current banking crisis. They illustrate it using a dollhouse loan that goes bad:
"Mark to market, that's another phrase you might have heard. And it applies to exactly the situation Adam is in right now. He's got a dollhouse on his books for 100, but if he had to sell it now, he could only get 50 - that's the market price, what he could get right now. Marking it to market means Adam would have to enter the market price - 50 dollars - or 20 dollars - or whatever it really is - into his books.
And the bankers have all been saying 'please don't make me do that,' because if you do, I'll be declaring bankruptcy."
You can hear the podcast or read a complete transcript of the program at their website.
Tuesday, March 10, 2009
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