Subject: File No. 4-573
From: Karsten von Kleist, Ph. D.
Affiliation: Economist

October 16, 2008

Few people seem to realize that fair value accounting helped to inflate the asset bubble in the first place. In the good old days in Europe, assets had to be valued at market price or cost price, whichever was LOWER. This took a lot of fuel out of incipient bubbles and avoided the spiral of ever-higher prices and paper profits based on nothing but fanciful expectations.