Alexander Pollock, a research fellow at the American Enterprise Institute in Washington, has said that marking sub-prime instruments to market in the midst of the current credit crunch is almost impossible.

'How can positions be marked to market when there is no active market?' Pollock wrote in a letter to the FT. 'What does value mean when there are few or no bids? Should positions be marked to fire-sale prices? What if everybody does that at the same time and numerous insolvencies result?'.

Pollock's comments follow claims from respected UK academic Stella Fearnley that the current accounting standards of the IASB, requiring debt instruments to be marked to market, have helped to feed the credit bubble.

Further reading:

Fair value fingered for market crash

Fair value accounting a 'bubble-blowing' model