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SFAS 157: Accounting Rules Do Not Affect Cash Flows

If you can't see how MTM has hurt firms holding certain mortgage/debt securities, then you are unfit to write here. If I hold your mortgage and you pay me, my MTM stays at the value of your mortgage. However, if I hold 10,000 bundled mortgages (CDOs, CMOs) and they are opaque to outsiders trying to guage the total potential defaults, the MARKET price on that security wil drop SUBSTANTIALLY. Now, every loan in there might be to someone just as good as you - but the FEAR that there's junk in there - drives the CDO value to MUCH LOWER levels than if those mortgages were owned individual as per me owning yours. In this instance, the MARKET - especially during a crash, is a WARPED measuring stick which DOES NOT reflect the actual economic value of the underlying loans accurately. If you can't see this then, how shall I say this delicately... you are STUPID!