Although the company has been failing to service its debts, it claimed that it is solvent because its liabilities were smaller than its assets, which the management values at replacement cost.

ECONOMIST: Broken Thais

And there is Tobin's q, a ratio of the stockmarket value to the replacement cost of its tangible assets an attempt to measure what it would cost to recreate a company from scratch.

ECONOMIST: A survey of global equity markets: Valuation waltz | The

These find that, when the ratio (suitably adjusted to take care of accounting discrepancies) moves far above one, equilibrium is indeed eventually restored not, however, by a surge in the replacement value of companies' assets but by a correspondingly dramatic fall in the value that Wall Street places on them.

ECONOMIST: Letter of credit | The