[dex]

One aspect not mentioned is that the large write downs that have been done are based upon estimated value of the bond/loan - not after a loan is offically in default.
So if you have 1 billion in bonds and you estimate that 3% of the dollar value will not be collected over the life of the bond you write it down as an asset by that amount.

This is a basic principle of accounting and similar to what credit card companies do - they have a bad debt reseve (which is a different kind of write down) They establish a reserve for bad debt based upon historical defaults.

Also companies would want to do the write down of all the affected bonds now instead of over an extended period of time - it gets the bad news behind them and eliminated the question from future earnings reports.

So the information above should have been taken into account.

The issue is - did they write it down enough or too much?
So to determine where we are in the crisis is the rate of default - is it higher or lower than the percent of write down used. That is the important question.

I'm not impressed with H's analysis here or in other things posted from him.