Mark to Market?

One of the reasons for our current meltdown in the financial system is something called mark to market pricing. In theory it was to protect investors from crafty book keeping that would hide low value or depreciating assets from the public. When real estate became large parts of investment firm assets and had to be valued with the mark to market model it just didn't work. In a liquid market with full transparency mark to market may make sense but real estate is not liquid and it is not a monolith. There are many different ways real estate produces a return on invested cash that mark to market fails to address. If one firm folds and they have had to mark down real estate assets because they have been bundled into traded securities of which the good and bad are indistinguishable, the value of all real estate backed securities had to be priced accordingly. It is one big casserole surprise that looks very burnt on the surface and no one wants it because they don't know what is inside. Anyone holding these mortgage backed securities appears to be ready for a fall, true or not, and it becomes more and more difficult to obtain funds, investors withdraw funds and downward spiral may lead to the end.