Start with Merrill Lynch's giant $15 billion write-down of mortgage-related securities in January, which CEO John Thain introduced with a curiously contradictory "I think we're being conservative, but I don't think that we're likely to get much back on these things." Mmm. Either Merrill's write-downs are conservative, in which case many of the assets will come back, or they aren't. Is it any wonder Wall Streeters kibitzing about possible spectacular "write-ups" once the credit crisis passes point to Merrill as a top candidate?
Or take AIG's unexpectedly large write-down of subprime paper on Friday, blamed for the market's sell-off. Its chief told the world that its mortgages on paper had lost $11 billion in value, but sotto voce predicted these "unrealized" losses would eventually correct themselves.
Or take Sam Zell, a real-estate investor whose pronouncements are given great weight in the markets. He pooh-poohed the red ink being liberally spilled on Wall Street, saying, "It's not a cash crisis, it's a 'mark' crisis," and predicted that write-ups would undo much of the damage once the "panic" subsides.
In a couple of years I suspect banks will be crowing about gains in their portfolios as they mark these things back up. It won't mean any more then than the mark downs do now.