If We Had To Abide By Mark - To - Market Accounting:

1) We'd need to come up with 20% of the lost value of a new car we had just purchased, in cash, the same day we drove it home from the dealer.

2) Each day we drove the car, we'd need to settle up, in cash on that same day, the difference between the car's sales price and it's used value each day we drove it.

3) We'd need to come up with, in cash today, the difference between our home's current value and the value of the loan backing it.

3a) In this case, the value of the loan backing all our homes -- if that loan is securitized -- is zero. This means you have to come up with the entire purchase price of your home, in cash, today.

4) If you are lucky enough to have paid cash for your home, you need to come up with, in cash today, the difference between the value when you bought it and the value it has today. (If you bought in the last 4-5 years, figure on 15-35%.)

4a) We'd need to come up with, in cash today, the amount of all our outstanding credit card balances, if part of a securitized CDO (Collatoralized Debt Obligation).

The problem is when you start treating loans like equity and marking them to market, instead of marking them to maturity, or marking them to the discounted NPV of Future Cash flows, you're calling the loan immediately. But a loan is meant to be repaid OVER TIME. If you have to mark it to market today, then you are not allowed any time to pay it off. Thus the conundrum of Mark to Market. If I had the money, I wouldn't need the loan.