Mark-to-market accounting is one of those ideas that sound brilliant until you try to do it when there is no market. That’s where mark-to-model comes in: companies say things are worth what they ought to be worth.
But as Wall Street’s credit squeeze has worsened, even mark-to-model seems to be too generous a term. Mark-to-muddle may be closer to reality.
Consider Citigroup, which says it may report a loss of $8 billion to $11 billion on a portfolio of $43 billion in “super-senior” securities from those esoteric things called collateralized debt obligations, or C.D.O.’s. Those are securities that Citi evidently saw as being of little or no concern only a few months ago. Now up to a quarter of their value may be gone.
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