Perhaps you would care to take a stab at walking through the balance sheet carefully and laying out exactly what has to happen for them to go over? I've read no story that accurately conveys whats going on. I take it your second graph is the gist of this? ie if they write down Alt-A and subprime loans they wipe out all equity. the question i have is, even if in a cumulative sense, at what dollar value vs par are those loans already marked? are they held in an accrual accounting system, or could they be level 3 assets? everyone agrees that this has become a liquidity crisis- if so, the carry from those loans may be much better than expected, and all you have to do is hold them. if the loans are all marked at 10 cents on the dollar, there's precious little room to mark them down further, no?
Perhaps you would care to take a stab at walking through the balance sheet carefully and laying out exactly what has to happen for them to go over? I've read no story that accurately conveys whats going on. I take it your second graph is the gist of this? ie if they write down Alt-A and subprime loans they wipe out all equity. the question i have is, even if in a cumulative sense, at what dollar value vs par are those loans already marked? are they held in an accrual accounting system, or could they be level 3 assets? everyone agrees that this has become a liquidity crisis- if so, the carry from those loans may be much better than expected, and all you have to do is hold them. if the loans are all marked at 10 cents on the dollar, there's precious little room to mark them down further, no?
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