… Mike Mayo – who recently left Deutsche Bank for Calyon Securities “ agrees the change in mark-to-market (MTM) accounting will do little to save the banks. He released a new report saying banks’ loan losses will exceed those during the Great Depression. According to Bloomberg, Mayo “expects loan losses to increase to 3.5 percent by the end of 2010. Mortgage-related losses are about halfway to their peak, while credit card and consumer losses are only one-third of way to their expected highest levels.”

The changes to MTM accounting will alter banks’ balance sheets by only one-third or less and will have no impact on “the economics of bank troubles.” Especially considering that loans have been marked down to only 98 cents on the dollar, on average….”

Now regarding this post, it was my understanding that one of the reasons the dot.com bubble was not as pervasive as this current one was that it was mainly a US centric bubble, one that did not sweep through the global investment community. And too, the damage was largely extended only as far as stockholders since there was not a massive involvement of the bond market in dot.com companies as they were too new and without a viable credit base. The hot money came from an avalanche of IPOs. Plus, I think hedge funds back then actually did some hedging, leaving the debt business to the bond boys.