Over the past few days we’ve received a few emails rather adamantly criticizing us for paying “too much attention to economic issues and not enough attention to real estate issues.”  To those critics we’d offer a brief comment. 

Not many would argue that the days in which we are living now will most likely be recorded as a critical watershed for the US economy. 

Candidly we must admit that as a team we’re not convinced by any means that decisions being made this year will be viewed kindly through the lens of history.  There is however, no doubt – the actions taken during the third and fourth quarters of 2008 in particular will redefine in many ways our near and in all probability our long term economic potential, and the impact very meaningfully the manner in which real estate assets are valued and funded. 

As we’ve noted on more than one occasion, no one on our team is an economist (and none of us want to be) – we are professional real estate investors and real estate market data wonks.  It is in our humble opinion, particularly at this juncture in time, absolutely critical for those who invest in real estate to understand the amazing changes taking place in the world of finance. 

That said, there is a key issue being somewhat hotly debated currently – mark to market accounting rules.  Barry Ritholtz at The Big Picture has a critical analysis of the issue posted today; it’s worth a read as are the links he has posted. 

As a team we lean to the side of the argument that rails against suspending mark to market.  Certainly not all of the toxic assets prompting this discussion are mortgage based, thought many are, and the fly in the ointment is what to do with decent quality mortgage paper that is awash in a sea of garbage. 

This is an issue you need to spend some time with to get a grip on, but it has the potential to have critical impact on your economic future. 

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