Comments for "FASB Eases Mark-to-Market Rules"

1134 says:

Good.

1134 Thu Apr 2 08:27:34 2009 CDT #

Comrade Bear (tj and the bear) says:

I guess burying your head in the sand really does feel like a day at the beach.

Comrade Bear (tj and the bear) Thu Apr 2 08:28:56 2009 CDT #

1134 says:

Not even wrong.

1134 Thu Apr 2 08:29:12 2009 CDT #

CRbot says:

This comment thread has been CRC-IZED by yagij (CRbot helped a little).

href="http://realize.org/cr/crcizer/phpCRCo.php?path=%2F9026879440396282538&ord=asc&csslayout=reg&topic=FASB+Eases+Mark-to-Market+Rules

And for the stubborn old-timers... it's also been HALO-IZED by CRbot.

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CRbot Thu Apr 2 08:29:39 2009 CDT #

JimPortlandOR says:

My significant judgement is that until the feds eat all the bad instruments, no bank's financial statements can be anything other than a joke.

JimPortlandOR Thu Apr 2 08:30:10 2009 CDT #

Comrade Byzantine_Ruins says:

http://www.youtube.com/watch?v=M1owcncKCHg

Comrade Byzantine_Ruins Thu Apr 2 08:30:51 2009 CDT #

Sr. Lopez says:

When I grow up I want to be a bank.

Sr. Lopez Thu Apr 2 08:33:15 2009 CDT #

1134 says:

The invoicing crunch

Inventory data from the US and Euro economies certainly suggests a more abrupt shift in inventories amongst small businesses than is typical in even a severe economic downturn.

http://ftalphaville.ft.com/blog/2009/04/02/54377/the-invoicing-crunch/

1134 Thu Apr 2 08:33:17 2009 CDT #

Interesting Times says:

Did someone mention clothes?

Interesting Times Thu Apr 2 08:33:28 2009 CDT #

Tom Stone says:

Talk about a death knell for the market.This is not "The only game in town" and someone can always start a new game.Who will play here given a choice of a more transparent less obviously rigged market? what they sell is an honest (more or less) game of poker for crying out loud,not something mystical.

Tom Stone Thu Apr 2 08:33:54 2009 CDT #

Guest says:

Another opportunity to fade a rally. The gift that keeps on giving.

Guest Thu Apr 2 08:34:15 2009 CDT #

Guest says:

Who cares. This is the way it was done for decades and now all these people are up in arms because we're just going back to the way it was pre-2007. What a joke. Mark-to-market let these banks write down their own debt obligations to market! How can that be right? You still have to pay them off at par regardless of where they are trading. Mark-to-market was FASB at its worst and just an attempt to provide liability cover for the accounting profession who didnt want to have to evaluate the adequacy of loss reserves. They should drop the entire concept. It's significantly flawed as structured and has just as big a risk of overstating values.

Guest Thu Apr 2 08:34:31 2009 CDT #

popeye says:

Byz,
That video was a riot.

popeye Thu Apr 2 08:34:49 2009 CDT #

bishophicks says:

I applied the same rules to my own finances and increased the value of my 401k and the value of my home. As a result, my net worth has increased significantly and my retirement is now secure.

What a relief!

bishophicks Thu Apr 2 08:35:00 2009 CDT #

nincompoop says:

Excellent.

Parent Post

nincompoop Thu Apr 2 08:38:37 2009 CDT #

JimPortlandOR says:

woohoo, DJ/S&P open up over 2% on news that unemployment jumps again.

what's not to like if you are greedy and uncaring? hunger is good for stock prices.

JimPortlandOR Thu Apr 2 08:35:31 2009 CDT #

Black Star Ranch says:

It is seriously a total nightmare. All bets are off - with exception of the crooks - the 5-6 companies in league with the devil. "Fair Value" is the new dollar dollar. "Mark to Imagination" is the new game. Thank gawd I don't support this regime in ANY way anymore. Anyone who does is in league with the devil himself.

Black Star Ranch Thu Apr 2 08:35:52 2009 CDT #

Cinco-X says:

BSR,
What was the name of that House Bill you mentioned some weeks ago, the one where it sounded like they were trying to put small farms out of business?
Thanks-

Parent Post

Cinco-X Thu Apr 2 08:56:43 2009 CDT #

nazdagg says:

don't like the game? change the rules. kind of reminds me of the way some people play croquet.

nazdagg Thu Apr 2 08:38:23 2009 CDT #

burh says:

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aKtn_Z8LUqZk

burh Thu Apr 2 08:39:12 2009 CDT #

Ho Lee Kow says:

If you are asking who the bagholder is, it's about time somebody cracked the news: the bagholder is you, your children, grand-children, great-grand children and so forth.

Ho Lee Kow Thu Apr 2 08:41:38 2009 CDT #

calmo says:

your community...that does not charge you fees, provide professional services, persuade you that your future is provided for...with investments, solid investments that will deliver...not like your so-called friends or your high maintenance family.

Parent Post

calmo Thu Apr 2 10:21:42 2009 CDT #

Sexy Derivative says:

....allow companies to use “significant” judgment in valuing assets...

My all-time favorite FASB passage. Who says accounting is boring?

Sexy Derivative Thu Apr 2 08:42:21 2009 CDT #

Interesting Times says:

Calvinball economy. And your name is not Calvin.

Interesting Times Thu Apr 2 08:42:32 2009 CDT #

Comrade Bear (tj and the bear) says:

This is the way it was done for decades

Great point, but it's not so much what they're doing is why they're doing it. It's accounting alchemy.

Comrade Bear (tj and the bear) Thu Apr 2 08:42:34 2009 CDT #

Angry Saver says:

<tbody>

I've been toying with an idea. I think we should publicly give the inflation gatherers a choice. Either put your wealth to productive use immediately, let the government redistribute the money immediately or face an outright deflationary bust and watch your faux wealth disappear.

Those choices seem much more prudent than printing and/or indebting ourselves for generations.

End the financial terrorism now!

Millions in defense, not one cent in tribute! (Thomas Jefferson)

BTW, most of the inflation has accrued to the top 1/2 of 1% of wealth holders.

Like this comment? [yes] [no] (Score: 0 by 0)
Community assigned karma score: 0 by 0
Mark as offensive

</tbody>

Angry Saver Thu Apr 2 08:42:56 2009 CDT #

Guest says:

Spent this morhning trying to figure out the best way to re-flate a balloon that has a hole in it. The hole just keeps getting bigger and bigger, and I'm all out of breath.

Guest Thu Apr 2 08:44:57 2009 CDT #

Anonymous says:

You just have to change the definition of a 'fully inflated balloon.' Then you are all good.

Parent Post

Anonymous Thu Apr 2 09:58:07 2009 CDT #

Wisdom Speaker says:

Not to worry! Of COURSE all the auditors will make sure the fair value estimates are correct. Just talk with some guys at KPMG! (And you might be able to find some Arthur Andersen folks still out there at other firms, too!)

After all, the auditors have the same set of incentives as the rating agencies, and we've NEVER had any trouble with poor, inflated ratings by agencies seeking to maintain business!

Wisdom Speaker Thu Apr 2 08:45:18 2009 CDT #

Rent2Moan says:

I'm a complete novice to economics...

but this seems like the shorting opportunity of the Millenia to me.

Oh wait, is shorting still allowed or can stocks only go up ?

Rent2Moan Thu Apr 2 08:45:21 2009 CDT #

Anonymous says:

I've heard this before, isn't it called "Mark-to-Fantasy"?

Anonymous Thu Apr 2 08:45:47 2009 CDT #

Sexy Derivative says:

use “significant” judgment

By the way, doesn't the use of quotes on 'significant', in itself, make the passage kind of the joke? I can picture some guy wearing a bow tie using air quotes as he's reciting it.

Sexy Derivative Thu Apr 2 08:46:30 2009 CDT #

Cinco-X says:

One has to wonder about allowing these companies to use their "judgement", when it obvious that their judgement over the past decade has been SOOOOOOO clouded.

Parent Post

Cinco-X Thu Apr 2 08:59:39 2009 CDT #

Comrade Byzantine_Ruins says:

Byz,
That video was a riot.

[meaning the careerbuilder up/down profits ad]

Thanks. I think it's my entire statement on the issue. I mean, what more can you say.

It seems to me that if these sorts of crises could be short-circuited by a mere accounting gimmick, the management of all financial matters would be profoundly different.

Comrade Byzantine_Ruins Thu Apr 2 08:47:06 2009 CDT #

YLSP says:

OTIT:
CRBot and Yagij...

Any chance at being able to set up an archive link of all the HALO-ized comments?

I've been archiving CR locally and since the comments went to js-kit have not found a simple way to archive the comments (since js-kit splits the pages into 2).

YLSP Thu Apr 2 08:47:23 2009 CDT #

Sexy Derivative says:

This is the way it was done for decades.

Well, yeah, until Enron came around.

Sexy Derivative Thu Apr 2 08:47:54 2009 CDT #

Turbo says:

Zombie banks - how to turn a nasty recession into a lost decade.

Turbo Thu Apr 2 08:49:52 2009 CDT #

REBear says:

Disagreements amounted largely to arguments around the "margins," Obama said.
Just hours later, however, Sarkozy and Merkel held a news conference of their own, where they made clear they would insist upon concrete and detailed pledges to rein in hedge funds, target tax havens and strengthen global financial oversight.
>
I bet the new accounting rule strengthens global financial oversight.

REBear Thu Apr 2 08:51:10 2009 CDT #

Anon E. Moose says:

Pilots of single-engine aircraft (and every pilot first learns to fly in a single-engine aircraft) have a plan to deal with an engine failure at night, when you can't see the ground below to pick a suitable emergency landing site. The plan is to wait until the plane descends low enough that the landing light illuminates the ground below. Then, take a look at what you see. If you like it, go ahead and land. If you don't like what you see... you turn the light off.

Our government just gave the banks permission to turn their light off.

Anon E. Moose Thu Apr 2 08:51:13 2009 CDT #

Black Star Ranch says:

Does anyone have a good link on the history of "Mark-to-Market" and why it was instituted in the first place?

Black Star Ranch Thu Apr 2 08:51:22 2009 CDT #

Anonymous says:

just in time for 1st quarter results !!!! I feel I am in chavez land

Anonymous Thu Apr 2 08:51:28 2009 CDT #

ZackAttack says:

Ravenous Bugblatter Beast of Traal accounting... Put your towel over your head because it's so stupid, it thinks if you can't see it, it can't see you.

ZackAttack Thu Apr 2 08:51:54 2009 CDT #

fafhrd says:

So now it's buy the news?

fafhrd Thu Apr 2 08:51:57 2009 CDT #

Anonymous says:

Bloomie is reporting this is as of Q1. CNBC reports as of Q2.

My read is that they threaded the needle by stating you can ignore distressed sales. What is that? When a Lehman goes boom? Isn't every other day an orderly sale? Hence, not a whole lot of new leeway given?

Anonymous Thu Apr 2 08:52:40 2009 CDT #

Comrade Byzantine_Ruins says:

The plan is to wait until the plane descends low enough that the landing light illuminates the ground below. Then, take a look at what you see. If you like it, go ahead and land. If you don't like what you see... you turn the light off.

+1

Comrade Byzantine_Ruins Thu Apr 2 08:52:53 2009 CDT #

Guest says:

"Dont like the game change the rules...."
Thats a ridiculous statement. FASB 157 (aka mark to market) didnt exist 2+ years ago. Were all you guys bitching back then when FASB changed the rules and put it into place? What a silly argument.
I really dont understand how anyone can support an accounting rule that allows financial companies to mark their liabilities to market which is exactly what FASB 157 does. Where do you think most of these banks generated income from in late 2007 - it was on their own debt trading down while they moved more of their assets to Level 3!! You guys clearly dont get it. How anyone with half a brain can support something that allows companies to mark their liabilities down based upon how they trade is beyond me - they have to pay their debt off at par regardless of where it trades! Why have the posters here been screaming about that? I know I was when FASB 157 was introduced.
Drop mark to market and expand disclosure of market values for the asset side of the balance sheet. Thats what any smart investor would want. 157 is flawed.

Guest Thu Apr 2 08:55:58 2009 CDT #

Guest says:

FASB 115 is a lot older than 2007.

Parent Post

Guest Thu Apr 2 11:52:08 2009 CDT #

Sexy Derivative says:

The angel of financial transparency just shed a tear.

Sexy Derivative Thu Apr 2 08:57:02 2009 CDT #

Anonymous says:

8-)

Anonymous Thu Apr 2 08:57:46 2009 CDT #

Ham Poops says:

oops - I was anaonymous...

From bloomie...(update 1)
http://www.bloomberg.com/apps/news?pid=20601087&sid=agfrKseJ94jc&refer=home
Accounting analysts say the measure, which can be applied to first-quarter results, may boost banks’ net income by 20 percent or more.

From CNBC:
http://www.cnbc.com/id/30009862
The changes will allow the assets to be valued at what they would go for in an "orderly" sale, as opposed to a forced or distressed sale. The new guidelines will apply to the second quarter that began this month.

Ham Poops Thu Apr 2 08:58:22 2009 CDT #

reptillian says:

The banks and everyone else are all good now, right?
Will the change save GM and Chrysler?

reptillian Thu Apr 2 09:00:15 2009 CDT #

Ham Poops says:

Which makes me think, while I don't like it, it's less powerful for the banks than the market is reacting

Ham Poops Thu Apr 2 09:00:49 2009 CDT #

Dead_Monkey_Bounce says:

FASB 107 has been in effect since 1995, and the substance of it was the same as 157. 157 was a clarification because there were a host of statements on the topic that even preceded that.

Dead_Monkey_Bounce Thu Apr 2 09:00:55 2009 CDT #

Lobbyi$t Ben Dover says:

I can hear it now. The Bank called and said I am over drawn! Can't be, my Mark to Fantasy accounting system says I got plenty of money! They are crazy!

Lobbyi$t Ben Dover Thu Apr 2 09:01:09 2009 CDT #

giacutter says:

I thought that this idiotic garbage was priced in by the all-knowing market a month ago.

Oh well. So much for the all-knowing market.

giacutter Thu Apr 2 09:01:14 2009 CDT #

Dead_Monkey_Bounce says:

"Exchange price valuation" aka Mark to Market has been a component of fair value for decades.

Dead_Monkey_Bounce Thu Apr 2 09:01:44 2009 CDT #

CRbot says:

The Latest from Ritholz:

Why Newspapers are Dying (not what you think)

CRbot Thu Apr 2 09:01:51 2009 CDT #

Interesting Times says:

Anon E. Moose - Great post.

Interesting Times Thu Apr 2 09:02:26 2009 CDT #

Ham Poops says:

another report that this is Q2, not Q1
http://blogs.barrons.com/stockstowatchtoday/2009/04/02/fasb-rules-we-all-win/

Ham Poops Thu Apr 2 09:02:41 2009 CDT #

Br\'er Dawg says:

Suggestion: Less judgement, more judges.

Br\'er Dawg Thu Apr 2 09:02:51 2009 CDT #

Yancey Ward says:

Woo Hoo! I knew we could be (profitable) this quarter! We just needed to get the accountants on board!

Seriously, though, this is really just returning to what used to be the rule, and not all that long ago.

Yancey Ward Thu Apr 2 09:04:59 2009 CDT #

bearly says:

Uncle Suga gonna contribute $100B to IMF, like we have it. Either gonna be in diluted dallahs or additional borrowing.

Sound ridiculous ? You BET!

bearly Thu Apr 2 09:05:05 2009 CDT #

REBear says:

guest @ 9:55,
Good point.
Question. Were the banks voluntarily marking assets to market before the housing bubble popped?

REBear Thu Apr 2 09:05:27 2009 CDT #

iceman says:

I'm smelling irrational exuberance.

So, the market thinks the problem with the banks was just an accounting issue. Lets ignore what's happening to unemployment, right?

iceman Thu Apr 2 09:06:19 2009 CDT #

Anonymous says:

This is an attempt to keep the ponzi going, create the illusion of wealth so that the entire securities industry can trade and make fee's. It will end very badly!

Anonymous Thu Apr 2 09:06:30 2009 CDT #

Cinco-X says:

Remember the guy in the original Matrix that wanted to be put back into the Matrix because the Matrix steak was so muce better than the gruel they were eating on their ship?

Parent Post

Cinco-X Thu Apr 2 09:09:05 2009 CDT #

MS says:

Guest-

do some reading on FASB implementation before you decide to make statements that are completely inaccurate.

Ciao
MS

MS Thu Apr 2 09:07:19 2009 CDT #

Black Star Ranch says:

Cinco-X...........that was HR 875. The Mrs. did some checking on it and small operations like ours (family hobby farm - less than 10-acres) are in danger of being required paperwork of such magnitude that we couldn't even raise chickens for our own use. No gardens for our own use. No milk from our cows for our own use. The "definitions say one thing, the body of the law say something totally different.

Black Star Ranch Thu Apr 2 09:07:47 2009 CDT #

Cinco-X says:

BSR:
See here- I hope there is some growing opposition to this act forming....

Parent Post

Cinco-X Thu Apr 2 09:14:06 2009 CDT #

Lobbyi$t Ben Dover says:

"Lets ignore what's happening to unemployment, right?"

That is next weeks cure. Mark to Employment Desired.

Lobbyi$t Ben Dover Thu Apr 2 09:08:35 2009 CDT #

burh says:

Close in the red would be appropriate.

burh Thu Apr 2 09:09:29 2009 CDT #

Anonymous says:

In a bubble market (orderly market) my house is worth twice what the current disorderly market currently reflects so I will sell my house to the government at the orderly price!

Anonymous Thu Apr 2 09:10:04 2009 CDT #

shill says:

U.S. FACTORY ORDERS RISE FOR FIRST TIME IN SEVEN MONTHS

--------------

What Factories? And what orders!....this is such BS!

shill Thu Apr 2 09:10:07 2009 CDT #

Anonymous says:

See page seven for the SEC's reasons for NOT suspending M2M in a report issued at the end of December (PDF warning) http://sec.gov/news/studies/2008/marktomarket123008.pdf

here's the SEC's rationale:

- Fair value and mark-to-market accounting has
been in place for years and abruptly removing it
would erode investor confidence in financial
statements.

-Fair value and mark-to-market accounting do
not appear to be the “cause” of bank and other
financial institution failures.

- Mark-to-market accounting is generally limited
to investments held for trading purposes and for
certain derivative instruments; for many
financial institutions, these represent a minority
of their total investment portfolio.

-Over 90% of investments marked-to-market are
valued based on observable inputs, such as
market quotes obtained from active markets.

-Investors generally agree that fair value
accounting provides meaningful and transparent
financial information, though improvements are
desirable.

Anonymous Thu Apr 2 09:10:47 2009 CDT #

Dead_Monkey_Bounce says:

Obviously Bloomberg hasn't even read the RFC because they would know that this statement isn't anything like a change in the rules: http://www.fasb.org/fasb_staff_positions/prop_fsp_fas157-e.pdf

Dead_Monkey_Bounce Thu Apr 2 09:11:12 2009 CDT #

popeye says:

I do not own the market

I don't tell it what to do

I’m a simple passenger

But I’m not here for the view

I am not the engineer

I don’t keep the train on course

and I don’t stoke the boiler

that’s for those who have real force

I’m just here to take this ride

To listen and wait and sit

Until the market beckons

Me to take my small profit

All aboard that are coming aboard.


popeye Thu Apr 2 09:12:01 2009 CDT #

Lifeguard1999 says:

Former New Orleans Saints running back Deuce McAllister has closed car dealership. The dealership filed for bankruptcy last month.

http://www.clarionledger.com/article/20090402/NEWS/904020351/1002/news01

Lifeguard1999 Thu Apr 2 09:14:23 2009 CDT #

bearly says:

Are the euro protesters burnin' obama effigeis at G20 yet ?

bearly Thu Apr 2 09:14:52 2009 CDT #

scav says:

"significant" =/= "good".

Wouldn't want to expect the banks to have to learn any new tricks or anything.

scav Thu Apr 2 09:15:50 2009 CDT #

REBear says:

"January's orders were revised sharply lower to a 3.5% decline from 1.9% reported a month ago"

REBear Thu Apr 2 09:17:04 2009 CDT #

homedad43 says:

Okay, so why was FASB 157 considered? And FASB 107 in it's place prior to that?

They were considered in response to the realization that the banking system was seriously amiss in how they had come to value assets. Prior to the onset of the computer model valuation - not all that long ago - then there really was no alternative way to value apart from looking at the market.

I'm thinking in terms of a trajectory with the assets being valued over time by market. The market assures that there will be a generalized trajectory of asset value, within the typical variances. With the inception of the mark-to-model system, it's like the trajectory of the new valuation has been pumped upwards and away from the traditional trajectory of the mark-to-market valuation. As time continues, the variance from the two widens until valuation is meaningless. And unfortunately, the market is more closely based to reality than a computer simulation.

These FASB measures were an attempt to enforce some sense of market discipline on asset valuation.

homedad43 Thu Apr 2 09:20:08 2009 CDT #

MPinCO says:

Feels like a necessary step to raise marked value of assets before they are sold to the taxpayer.

It does not mean the actual value has changed

MPinCO Thu Apr 2 09:21:08 2009 CDT #

Hypocrisy says:

=IF(bubble=inflating,MTM=TRUE,MTM=FALSE)

Any questions?

Hypocrisy Thu Apr 2 09:22:47 2009 CDT #

MS says:

So have we finally put to bed the whole defaltion thing? This just clinches it for me....

Say hello to massive inflation.....maybe not initially however that's where we are headed with this BS.

Ciao
MS

MS Thu Apr 2 09:23:00 2009 CDT #

Guest says:

Dead Monkey - I know the history - I live with it in my work. 157 is the problem. It was far more than a "clarification" as you suggest.
MS - please enlighten me with your wisdom. I deal with mark-to-market every quarter in my business, am quite familiar with its real world application and have regular meetings with our accountants to discuss it. What do you do other than bitch about it potentially being changed?
You guys that are crying for it have no idea how you are being duped already. Not one of you has paid attention to whats going on on the liability side as a result of 157.
The more I read these comments the more I realize that lemmings exist on all sides - bear and bull. And usually neither type of a lemming has a clue why they argue for or against something - as clearly is the case with mark-to-market - they just follow the herd right off the cliff. Keep arguing for 157 and the banks will keep on marking down their liabilities booking those gains through income....

Guest Thu Apr 2 09:23:12 2009 CDT #

Anonymous says:

Why don't you enlighten rather than chastise? Go ahead...

Parent Post

Anonymous Thu Apr 2 09:29:51 2009 CDT #

hc says:

Told you there's too many shorts in the market. Part of this current rally is short killing.

I didn't understand when everyone is piling up on negatives and trading like the market will end in 2009.

The market will probably be very close to dying, but it most likely won't end in 2009. Patience people; Japan's decline is 20+ years. We're so premature at this point.

The FASB rule change has been played before by the Japs. It cemented their lost two decade because after burying their head in the sand, nobody will have any clue how deep the rabbit hole is, so capital formation stops.

But their collapse isn't immediate nor imminent, nor will ours be. The rampant shorts in the past quarter or so are just so premature. They'll get killed, and they did.

There'll be a FASB induced rally; just like Japan had one; but that just sets up the real decline later.

If there ever was a "long term short" opportunity, the market is now creating one. We'll flip the common knowledge that shorting is for short-term play around.

hc Thu Apr 2 09:24:04 2009 CDT #

Mannwich says:

Great. More obfuscation is just what the doctor ordered. Back to la la land.

Mannwich Thu Apr 2 09:24:21 2009 CDT #

MS says:

nice try Guest.....it has nothing to do with real world application of it. Since you or I don't get to mark anything to model. Call me back when you get the same opportunity...

Ciao
MS

MS Thu Apr 2 09:26:05 2009 CDT #

Dead_Monkey_Bounce says:

Old staff position: ""determining fair value in a dislocated market depends on the facts and circumstances and may require the use of significant judgment" New staff position: substitute "inactive" for "dislocated" it is not a change at all.

Dead_Monkey_Bounce Thu Apr 2 09:26:09 2009 CDT #

Just Askin says:

Your IRA/401K ===the swimming pool

FASB says....Calvinballllllllllll

Just Askin Thu Apr 2 09:26:14 2009 CDT #

kharris says:

1134,

Look at what has happened to international trade volumes since the fall. That has the same sort of causes as the inventory crunch. A good bit of trade finance is invoice finance, or directly rated (factor lending against invoiced). When you doubt the other guy's ability to sell, you tighten up finance to get your money sooner. The other guy doesn't have the capacity to finance any other way, so volume drops. Vicious cycle.

kharris Thu Apr 2 09:26:47 2009 CDT #

Comrade Byzantine_Ruins says:

The more I read these comments the more I realize that lemmings exist on all sides - bear and bull. And usually neither type of a lemming has a clue why they argue for or against something - as clearly is the case with mark-to-market - they just follow the herd right off the cliff. Keep arguing for 157 and the banks will keep on marking down their liabilities booking those gains through income....

Note that you're saying this while making an empassioned argument for a point that is not only moot, but that carried the argument.

Comrade Byzantine_Ruins Thu Apr 2 09:27:15 2009 CDT #

Dead_Monkey_Bounce says:

DoL unemployment figures: http://www.bloomberg.com/apps/news?pid=20601103&sid=auXXKT2kEqCg&refer=us

Dead_Monkey_Bounce Thu Apr 2 09:28:31 2009 CDT #

Anonymous says:

People need to read the specifics of the FASB rule change. It does not eliminate mark to market. It says that if a company passes a two pronged test, they can choose not to use recently traded (quoted) prices to value an asset and instead rely on other valuation techniques -- e.g. DCF. Now of course that is open to judegment and manipulation but not as much as I think the analysts, who I suspect have never had an appraisal for items such as FAS 141 or FAs 142 be audited, would like to think.

The only thing I did not like is that it is not clear if the company can or must disclose the change in how they are valuing the assets. My hope is its the latter which means read the footnotes.

Currently there are several classes / types of assets valued under fair value accounting using this method (DCF or judgement) and even these I see getting marked down rather frequently.

So while I wish they had not changed this, this does not mean the banks get to set whatever price they want. They must prove that the quoted prices are in a distressed market and if the market for securities does come back, well no more judgement. And if they do prove that the market is distressed, they still have to base asumptions in the DCF method on some basis of external measures. The new examples inside the FASB rewrite seem to suggest they cannot simply take the best / most favorable of these outside assumptions (think discount rate.)

My experience is it will depend on the auditors. Some of the big firms are very serious and tough wehn it comes to reviewing valuations that rely on judgement, some, unfortunately, are not. So there will be some discipline (and make sure to find out why a company changes auditors as this may be a clue that the valuations used by management simply are not that rigorousl).

I would say on a positive note this is a more full employment act for appraisers of such assets. So at least if that is in your mix of services provided to clients, this is a positive.

Anonymous Thu Apr 2 09:28:44 2009 CDT #

Bond Girl says:

Well, this means the assets aren't toxic anymore, right? No more bailouts are necessary, right?

Bond Girl Thu Apr 2 09:29:10 2009 CDT #

Dead_Monkey_Bounce says:

Actual DoL link: http://www.dol.gov/opa/media/press/eta/ui/eta20090333.htm

Dead_Monkey_Bounce Thu Apr 2 09:29:58 2009 CDT #

homedad43 says:

Guest:

So what do you suggest?

157 might be viewed as the problem now, but from where I sit, the mark-to-model system ultimately created the problem with valuations fully out of touch with reality. And now the financial system has had to come to grips with the understanding that they've built everything on assets that simply aren't worth what they previously thought. And the problem is that if they accept what the market really thinks that they're worth, then they're toast. So there is an illiquid market and no movement because they won't sell at what they might really get. And the taxpayer is asked to fork over a premium.

157 might be viewed as a problem, but the deviation from market valuation in the first place is what created this cluster****.

Baby, meet sword.

homedad43 Thu Apr 2 09:30:25 2009 CDT #

Dead_Monkey_Bounce says:

Factory orders up: http://www.marketwatch.com/news/story/us-factory-orders-increase-first/story.aspx?guid={56A3C108-FA70-4D9C-85F8-240D6AD9D867}&dist=msr_5

Dead_Monkey_Bounce Thu Apr 2 09:34:43 2009 CDT #

will says:

Increased uncertainty will make things worse not better FWIW

will Thu Apr 2 09:35:11 2009 CDT #

Dogbert says:

WTF is "significant" judgment?

It doesn't sound like a concept with any meaning. Maybe "reasonable" judgment was too strong for them.

Dogbert Thu Apr 2 09:36:17 2009 CDT #

wally says:

Since the “significant” judgment of these banks is what got us where we are, there is not much to be said at this point.
The sheer stupidity of having your entire banking system openly and publicly under the control of self-deluding liars and telling them to let it rip is not a move that seems to me to be particularly wise.

wally Thu Apr 2 09:39:08 2009 CDT #

CRbot says:

The Latest from Yves:

Guest post: Are jobless claims peaking?

CRbot Thu Apr 2 09:39:37 2009 CDT #

Guest says:

Homedad - drop 157 and make the accountants do the work to see if the banks have proper reserves. This is all about the accounting profession shifting risk away from themselves. Post Enron they want less and less exposure to balance sheet judgments - its a joke - they do less work and want more fees. The accountants can utilize market values as part of their balance sheet diligence - but they need to do the work. A good audit will flush out any material balance sheet issues far bettter than mark to market will. If we have FASB 157 in a frothy market we will have over-inflated asset values and most of the posters here will be crying for it to be dropped. And in a market like this it allows to banks and brokers to understate their liabilities. But of course few posters here are even aware of that and would prefer to follow the rest of the lemmings of the cliff....

Guest Thu Apr 2 09:46:51 2009 CDT #

Anonymous says:

The American economy can't function without a good scam/ =-X

Anonymous Thu Apr 2 09:52:50 2009 CDT #

Comrade Byzantine_Ruins says:

Why don't you enlighten rather than chastise? Go ahead...

The ruling is meaningless, becaue it already confirms what stands, it just affirms it as formal policy. It doesn't matter what administrative thesis you advance it under, the only reason this is taking place is that there are a great raft of assets held at inflated values and classed as distressed.

The ruling's real purpose is to act as a fig leaf for the fact that those assets are overbooked. If the real losses were realized, they'd be wiped out utterly. So you delay them acknowledging their losses and they go forward, absorbing resources but not lending. That's why they're called zombie banks. Eveything else is a distraction.

Comrade Byzantine_Ruins Thu Apr 2 09:53:02 2009 CDT #

nades says:

Byz....

Wouldnt the collatoral be inflated and the assets are what they are? I would think the only thing that could inflate the value of the assets would a decrease in the interest rate. (Lets not forget that the current interest rate is one of the reasons that the banks are still alive at all... I think the 10 yr interest rate should be closer to 8% FWIW)

Parent Post

nades Thu Apr 2 10:04:26 2009 CDT #

nades says:

Am I missing something? TIA

Parent Post

nades Thu Apr 2 10:04:48 2009 CDT #

Anonymous says:

<h1 id="articleTitle" class="articleTitle">Tax dodgers multiply as underground economy cushions job cuts</h1>

http://www.denverpost.com/theeconomy/ci_12039508

Cash only baby and hell no you can't have a receipt


Anonymous Thu Apr 2 09:54:33 2009 CDT #

Dead_Monkey_Bounce says:

Bombardier profits booming, so it must be time to fire more workers! http://www.bloomberg.com/apps/news?pid=20601082&sid=aw_615_XIbXE&refer=canada

Dead_Monkey_Bounce Thu Apr 2 09:55:02 2009 CDT #

Starbucks says:

Let the games begin!

Starbucks Thu Apr 2 09:56:06 2009 CDT #

kaleetan says:

If the market continues this nonsense we will get our first Limit down of the bear market.. One day we are going to wake up with the futures down 500+

kaleetan Thu Apr 2 09:56:08 2009 CDT #

MS says:

"drop 157 and make the accountants do the work to see if the banks have proper reserves. "

According to our wonderful system it's already been done. You are presenting a flawed argument when you want the results delivered from within a system that is trying it's best to not deliver those actual results. Afterall it's not really about allowing any price discovery...otherwise why change the rules?

When you have billions of "assets" sitting in Level 3 that have, in reality, no chance of ever coming out and having a real world valuation assigned to them you get the rules changed so that you can assign whatever you want to them (and more importantly write them up after they've been written down-which is really what this is all about IMO-)

If you can't see the fallacy of that then nothing I, or anyone else FTM, can say will ever "enlighten" you.

Ciao
MS

MS Thu Apr 2 09:56:44 2009 CDT #

Morocco Bama says:

In further news, in light of the FASB's latest loosening of Mark To Market, the NFL has indicated that there will no longer be any sidelines, and the field can be as wide as you like it. Helmets will still be required.

Morocco Bama Thu Apr 2 09:57:21 2009 CDT #

popeye says:

Purity is pointless.

popeye Thu Apr 2 09:57:36 2009 CDT #

Guest says:

MS writes: "Since you or I don't get to mark anything to model. Call me back when you get the same opportunity... "

I pretty much mark everything to market - thats how I figure out what to buy and sell. If the market price subtantially deviates from my model then I trade. Man, you must be getting killed in this market.....
You should stop paying so much attention to the market prices and start doing some analysis.
MS, you're proof that momentum investors exist in both bear form and bull form. The momentum guys just follow the price trend and do no work. They look smart until the markets become mispriced because they mark everyting to market rather than model.
Under FAS 157 you'd be able to write down all your liabilities - your mortgage, credit card debt and auto loans - to market which is no doubt less than par if you are subprime. So, using your logic, since you clearly cant do that why is FAS 157 right?
I look forward to your non-answer.

Guest Thu Apr 2 09:57:57 2009 CDT #

hc says:

Guest:
"I pretty much mark everything to market - thats how I figure out what to buy and sell. If the market price subtantially deviates from my model then I trade. Man, you must be getting killed in this market....."

What you're saying is pretty much what George Soros has written once, the theory of reflexivity and that the market can oftimes be irrationally wrong.

I agree that Mark to Market, when marked against such an irrational market, creates crazy behavior.

In a way, during periods when the market is being irrationally exuberent, MTM can cause banks to go into overlending mode, because assets are looking so awesome. Similarly, you can argue that when markets are temporarily depressed, MTM can worsen banks' pessimism and overtighten unnecessarily.

I buy that.

What I don't buy is how is any model any better?????

Didn't all our financial models assumes "home price always go up", because historically they've never declined nationally??? Don't models get "updated" as asset's market prices exceed the model's expectations, so that the new, higher level is what the model reflects?

You can't have mark to model, where the model only gets updated "up" with the market, and then refuse to update the model "down", when the market does so. This is not fair accouting, it's fantasy accounting.

And your analogy on trading behavior is absolutely wrong:

You model a particular loss level you're willing to take; and you model an exit criteria when the asset exceeds your modelled gains; then you trade that way. Should a stock drops, your model should protect you from further losses, should a stock gain beyond your gains, you should've sold it to rebalanced it to something less risky.

What bank was doing that as opposed to betting on perpetual asset price increase model?

Parent Post

hc Thu Apr 2 10:14:12 2009 CDT #

Carneades says:

Capitalism's Crisis: Is There a Precedent?
www.TheValueatRisk.blogspot.com

Carneades Thu Apr 2 09:59:02 2009 CDT #

Anonymous says:

The accounting profession is now complicit in the ultimate failure of the republic. I am trained as an accountant. I am ashamed of my profession and its completely gutless leaders.

Anonymous Thu Apr 2 10:03:33 2009 CDT #

MS says:

guest-

yes make this about what you perceive what my positons and how they are performing. Again don't deal with the issue at hand...just pull out your dick, measure it and think you've got an argument.

You have no idea what you are talking about.....period.

Ciao
MS

MS Thu Apr 2 10:03:43 2009 CDT #

shill says:

I personally think these Gold and Silver prices as of today are a gift from the Gods.....buy!

shill Thu Apr 2 10:03:51 2009 CDT #

GinGary says:

I'm a long time lurker on my Treo (windows mobile 5.0) but since the move to the new comments system I can't see any comments (all at 0 Comments.)

Anyone know if/how this can be fixed? The withdrawal is torture.

GinGary Thu Apr 2 10:06:42 2009 CDT #

Simian says:

This was an article ( so I'm told ) from the St. Petersburg Times newspaper on Sunday. The Business Section asked readers for their ideas on "How Would You Fix the Economy?" I think this reader nailed it!
Dear Mr. President,
Patriotic Retirement: There's about 40 million people over 50 in the work force.Pay them $1 million dollars apiece Severance Pay with these stipulations.
1) They leave their jobs. Forty million job openings - Unemployment fixed.
2) They buy NEW American cars. Forty million cars ordered - Auto Industry fixed.
3) They either buy a house or pay off their mortgage - Housing Crisis fixed.

DONE! Economy fixed.

Simian Thu Apr 2 10:08:11 2009 CDT #

krid says:

that's 40 trillion dollars

Parent Post

krid Thu Apr 2 10:17:48 2009 CDT #

nades says:

One more question for anyone:

"What a joke. Mark-to-market let these banks write down their own debt obligations to market! How can that be right?" ~Anon

Is this true? They get to write down their obligations? This seems crimial. Did the poster confuse assets and liabilities in bank speak?

TIA!

nades Thu Apr 2 10:09:50 2009 CDT #

REBear says:

U.K.'s Brown says combined stimulus will total $5 trillion

REBear Thu Apr 2 10:10:20 2009 CDT #

Anonymous says:

I am curious about the side effect of this rule change to Tim Geithner's PPIP plan - Isn't it obvious that if the banks are not required to mark down their bad assets, they are going to pretend that everything is ok and no longer keen on getting rid of the toxic asset any more?

In the end of the day, the emperor has no clothes on indeed.

Anonymous Thu Apr 2 10:11:05 2009 CDT #

Anonymous says:

The Minnesota bank and Utah corporation that bought distressed assets from the Federal Deposit Insurance Corp paid about 4 percent and 6 percent respectively of the loan pools' book value, the FDIC said on Thursday in response to a Reuters Freedom of Information Act request.
http://www.reuters.com/article/bondsNews/idUSN0241022920090402

Glad we don't have to worry about that pesky mark to market crap. HAaaaaaaaaaa

Anonymous Thu Apr 2 10:13:44 2009 CDT #

Guest says:

MS writes: "When you have billions of "assets" sitting in Level 3 that have, in reality, no chance of ever coming out and having a real world valuation assigned to them you get the rules changed so that you can assign whatever you want to them."

Do you even realize that it is FAS 157 that created the "Level 3" classification? Do you understand that? Again, it is simply another reason why the entire thing should be dropped. Some firms carry the same asset in different levels at different valuations and things are constantly moved around. When the markets get frothy you will see a ton of assets move out of level 3 because the illiquid markets will overtate values in that environment.
Your statement that "you can assign whatever you want to them" as it relates to level 3 assets is wrong. I've been through several rounds of level 3 asset valuations with accountants and that is not how it works. However, it is a flawed process because these assets are illiquid and have no market - they should simply be carried at cost with appropriate reserrves until the become impaired. 157 allows you to write up illiquid assets - thats absurd - but you're not focused on that for some reason - or the fact that it allows them to write down liabilities.

Guest Thu Apr 2 10:15:12 2009 CDT #

cd says:

Simian,

There's about 40 million people over 50 in the work force.Pay them $1 million dollars apiece Severance Pay with these stipulations

ummm the 30-50 crowd would start a revolution...

cd Thu Apr 2 10:15:59 2009 CDT #

homedad43 says:

Guest:

Yeah, the accountants (should) have a strong role, esp in light of the crap at Enron/Worldcom. But how can they value it at market if there's no real market value? Where do they get that value? How do they assess? Zillow or a realtor can say that my house is worth $X, but that doesn't mean that the market will ultimately bear that out. As judged by the number of houses in my area just sitting waiting for a sale.

There are reasons that professions are specialized. As I read your post, I wonder what makes accountants so expert at ascertaining market value? Hell, that's akin to asking a midwife to perform abdominal surgery.

Market valuation is called precisely that because there's a market against which to mark. If accountants are to ascertain a realistic value, then there has to be something out there against which they can compare and make a realistic determination.

If you are doing it everyday, I'd suggest that:

1. You have a level of expertise in what you're valuing.
2. There still exists a market in which you can draw comparisons.

I go back to my original comment. There is no true existing market for many of these assets as the banks are unwilling to let them go for what any rational investor would pay. To do so would be to admit insolvency and failure.

homedad43 Thu Apr 2 10:16:19 2009 CDT #

CRbot says:

The Latest from Ritholz:

Top 10 Things the Letters “GM” Stands For

CRbot Thu Apr 2 10:16:24 2009 CDT #

MS says:

nades-

that's not really news..they've been doing that for a very long time. They then book them as a profit in some cases.....totally criminal yes...but it's allowed.

Ciao
MS

MS Thu Apr 2 10:16:50 2009 CDT #

nades says:

MS thanks for the reply. Thats past crimial its the sh*t that gets a person sent to hell... Dios Mio....

Parent Post

nades Thu Apr 2 10:26:38 2009 CDT #

Mannwich says:

Seems to me this creates more confusion and works directly against Geithner's PPIP plan, no?

Mannwich Thu Apr 2 10:17:37 2009 CDT #

MS says:

guest-

give it up...you don't have an argument...just a series of statements based on what? your personal experience?

I'll say it one more time...you are clueless and have no idea what you are talking about.

Ciao
MS

MS Thu Apr 2 10:19:51 2009 CDT #

Sexy Derivative says:

Tax dodgers multiply as underground economy cushions job cuts

I don't doubt this is happening, but the most significant behavioral change is that foreclosure has gone from shameful occurrence to a good business move. We don't yet know the impact.

Sexy Derivative Thu Apr 2 10:20:01 2009 CDT #

gig says:

so they return all the bailout money right?

gig Thu Apr 2 10:20:12 2009 CDT #

Kung Fu Panda says:

This is a travesty...arbitrarily changing the rules is a sign of a banana republic. I used to dismiss posters here who referred to the US that way, but I am changing my mind.

There were reports yesterday that KPMG is being sued for signing off on New Century's financials, which NC later announced were worthless. Big 4 audit opinions aren't worth the paper they are printed on.

Kung Fu Panda Thu Apr 2 10:21:13 2009 CDT #

CRbot says:

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CRbot Thu Apr 2 10:22:26 2009 CDT #

the man from nantucket says:

Anon, you're prob not going to get anywhere with MS. I tried on an accounting issue many months ago and he completely ignored GAAP. Not flaming you MS, but after I explained the situation you came back with posts that repeated your previous posts or weren't on-topic, so I dropped it. no skin off my back and no ill will towards you.

MS psoited that a company (i forget, think it was a net based compnay) was fraudulently booking revs because they run sales through the Income Statement before they actually collect the cash. Yeah, almost all companies book revs when sold on credit, they book an account receivable, it's not fraudulent, it's handled easily in GAAP.

the man from nantucket Thu Apr 2 10:23:37 2009 CDT #

Money Man says:

Booking orders as revenue is what KILLED LUCENT. The orders were NEVER paid for and we now have so much fiber laid...it will probably never meet it's utilization capacity. Nice try....

Parent Post

Money Man Thu Apr 2 11:49:28 2009 CDT #

Guest says:

nades writes: "Is this true? They get to write down their obligations? "

Yes nades, it is true. Here's a link to 157: http://www.fasb.org/st/summary/stsum157.shtml
"
The definition of fair value retains the exchange price notion in earlier definitions of fair value. This Statement clarifies that the exchange price is the price in an orderly transaction between market participants to sell the asset or transfer the liability in the market in which the reporting entity would transact for the asset or liability, that is, the principal or most advantageous market for the asset or liability. The transaction to sell the asset or transfer the liability is a hypothetical transaction at the measurement date, considered from the perspective of a market participant that holds the asset or owes the liability. Therefore, the definition focuses on the price that would be received to sell the asset or paid to transfer the liability (an exit price), not the price that would be paid to acquire the asset or received to assume the liability (an entry price)."
Read a couple 10-k's for 2007 for the big banks and brokers and you can see exactly how much of their profit came from writing down their own liabilities. For many, it was huge and the only reason they generated any earnings.

Clearly MS and others see that as not only acceptable but preferred - whereas I agree with you - its borderline criminal.

Guest Thu Apr 2 10:24:10 2009 CDT #

nades says:

Guest thanks for the link and help. Un-f'in-believe-a-burger!

Parent Post

nades Thu Apr 2 10:30:02 2009 CDT #

nades says:

So they would love to have their credit rating down graded so long as they can still borrow from the USG at the same rate.....

The more you learn the more you wish you hadn't....

Parent Post

nades Thu Apr 2 10:32:09 2009 CDT #

demonbankers says:

cooking the books for the bankers.

yet again we lose.

we need some riots.

demonbankers Thu Apr 2 10:25:05 2009 CDT #

Comrade Byzantine_Ruins says:

Wouldnt the collatoral be inflated and the assets are what they are? I would think the only thing that could inflate the value of the assets would a decrease in the interest rate. (Lets not forget that the current interest rate is one of the reasons that the banks are still alive at all... I think the 10 yr interest rate should be closer to 8% FWIW)

it's not about the mortgages per se, it's about the mortgages as securitized asset elements and their future payoff cash streams as collateral underpinning a structured finance vehicle. Leveraged bets that can no longer be unwound without large losses, secured by impaired cash streams. Are they assets if the increasingly notional payoff stream is securing the leverage of the Assmaster Master Fast Cash Investment Trust W/ Cheese III? I think that's where the light of the real issue lies.

Comrade Byzantine_Ruins Thu Apr 2 10:32:03 2009 CDT #

nades says:

going to have to reread this a couple of times! ;)

thanks for the reply :)

Parent Post

nades Thu Apr 2 10:41:07 2009 CDT #

Guest says:

MS writes: "that's not really news..they've been doing that for a very long time."

MS, you're either wrong or a liar. Find one example of fair market accounting writing down liabilities for financial institutions based on the market price of those liabilities prior to 2007 other than write-offs or cash purchases of such liabilities - just one. You wont because it was directly a result of FAS 157.

If you dont understand accrual accounting (as the man from nantucket said) there is now way you are going to understand this.

Based on you inability to listen to anyone else or process facts I would imagine you and Jas-wipe are pretty tight. You must be a lot of fun to spend time with.....my guess is that you're rarely wrong or so you think.

Guest Thu Apr 2 10:32:59 2009 CDT #

MS says:

nantucket-

It was with AMZN and it was just a little bit different then you remember. AMZN sold it's DVD rental assets and then piled the whole transaction into it's operations "bucket".......that's a bit different then booking sales on credit through it's income statement.

That's outright fraud IMO.....but they were allowed to get away with it.

Ciao
MS

MS Thu Apr 2 10:35:59 2009 CDT #

the man from nantucket says:

MS:

yes, AMZN, now I recall. My memory not being crystal clear from a months old issue, i'd love to go back and read the relavent posts before I make any other statements (now i'm curious to see what i wrote back then). And if I am completley off/wrong, I'll offer an apology. I have no problem with that.

Who can tell me how to search posts by author to take a look at that? much appreciated.

Parent Post

the man from nantucket Thu Apr 2 10:59:39 2009 CDT #

MS says:

Guest-

Apparently you can't read either....your statement:
"Clearly MS and others see that as not only acceptable but preferred - whereas I agree with you - its borderline criminal."

And what did I post before your statement?"

"They then book them as a profit in some cases.....totally criminal yes...but it's allowed. "

Which side are you on? you've been on both in your last few posts...

But no matter...I'm done with you as you clearly can't present an argument with any real clarity much less stick to one side.

Ciao
MS

MS Thu Apr 2 10:41:53 2009 CDT #

Cynical Crap Shooter says:

MS - the guy offered a very relevant example and asked a specific question.

Why are you evading it?

Cynical Crap Shooter Thu Apr 2 10:48:49 2009 CDT #

Guest says:

Cynical - he's evading it because he's a dope.

MS - you should be a political spin doctor based on the selcetive quote lifting in your last post.

I'm not going tehash your idiocy or ignoracne throughout this thread. Anyone who cares has seen it already.
You are short on knowledge and long on opinion.
You can go back to talking yourself up for your next post in front of the mirror.
By the way, "Ciao" is an incredibly lame sign off - but it works for you....

Parent Post

Guest Thu Apr 2 11:10:05 2009 CDT #

c0unterparty says:

Let’s all sit around in a circle and pretend that Citgroup and Wells are solvent.
Let’s suspend the accounting rules and live in a fantasy world where we never acknowledge losses.
I’m sure if we all hold hands and slowly chant I believe... I believe... that everything will work out fine.

c0unterparty Thu Apr 2 10:52:33 2009 CDT #

duke of con dao says:

wasn't it the banks I thought that was all for FASB 157 around 3 years ago because in it a 'frothy' market it allowed tremendous overshoot and now that's it the converse of that the same players want the rule removed?

duke of con dao Thu Apr 2 10:58:16 2009 CDT #

ANSFA says:

It is all about clarity!

I wonder if defense contractors will charge twice as much to Uncle Sam, according to their judgement? Same principle, isn't it?

ANSFA Thu Apr 2 11:06:32 2009 CDT #

Dirk van Dijk says:

Banks are now allowed to use "significant judgement". Is there a group in America, with the possible exception of Crack Addicts, that has collectively shown significantly worse judgement in recent years than bankers?

Dirk van Dijk Thu Apr 2 11:07:31 2009 CDT #

Jamie says:

maybe Politicians and 'Financial' TV show hosts

Parent Post

Jamie Thu Apr 2 13:53:17 2009 CDT #

Reluctant Serf Ken says:

Hrm, SKF back to the 80s, does it seem like a buy? While accounting changes may buy banks some time I don't see how it helps the fundamental problem of too much leverage and too many bad loans.

Reluctant Serf Ken Thu Apr 2 11:10:48 2009 CDT #

duke of con dao says:

I've been out of this game professionally for 15 years (formerly SB & BT)
last summer was the first I heard of Level 3 - stuck as I was on this lost island in the south China Sea - with time to kill I opened up a few annual reports - GS, in particular, and according to the footnotes if memory serves Level 3's if there are no outside benchmarks or pricing, blah blah blah then its up to the discretion of management to mark accordingly... am I missing something?

duke of con dao Thu Apr 2 11:13:23 2009 CDT #

Tailspin says:

It's all about the "DEBT" stupid. Not much discussion about that. Can't be paid off at par or anything close in these economic times cause thers's so F*#!ing much of it. The financial world is drowning in it but go ahead and mark it to fantasy the print lots of money to cover. Now lets see where that takes us. Anyone want to guess?

Tailspin Thu Apr 2 11:16:57 2009 CDT #

MS says:

guest-

my facts are not presented based on my personal experience and how I choose to see things. Your original post and responses are. Just because you think it's got to be this way or that way doesn't make it so.

But you knew that. BTW personal insults show exactly what angle you are coming from. I've refrained from them.....you obviously can't.

Good luck with that....

Ciao
MS

MS Thu Apr 2 11:23:31 2009 CDT #

Clotario says:

And stocks skyrocket, thus proving that investors care nothing for future prospects, everything for present appearances.

Clotario Thu Apr 2 11:33:45 2009 CDT #

crabsofsteel says:

No, stocks skyrocket because the dollar plummets. The companies make as much revenue abroad as they do at home, in terms of weaker dollars their price is higher.

Parent Post

crabsofsteel Thu Apr 2 12:33:52 2009 CDT #

Chuck says:

Not only are we building castles in the air, we're living in them now.

Chuck Thu Apr 2 11:47:39 2009 CDT #

Black Star Ranch says:

Isn't this 157 thing kind of like arguing about the exact color of the horse as it's leaping off the cliff?

The real problem is in the purchasing of these assets REGARDLESS what they're worth today. Geithner is limiting the groups allowed to purchase them and cooking the rules:

http://globaleconomicanalysis.blogspot.com/2009/04/more-ugly-details-emerge-on-geithners.html

This may have been posted previously, but BEARS READING AGAIN in light of this current discussion.

Black Star Ranch Thu Apr 2 12:03:24 2009 CDT #

Black Star Ranch says:

<correction: Isn't this <FASB 115 thing>...

Black Star Ranch Thu Apr 2 12:04:13 2009 CDT #

Indy says:

I read today on Yahoo news that 1 in 10 americans are collecting food stamps; is it fair to say that a great many people in the country are going hungry on a regular basis?

IMHO all assets ought to be 'mark to hunger'; playing with accounting standards when people are going hungry! Shame, shame :'(

Indy Thu Apr 2 12:30:14 2009 CDT #

BondsOfSteel says:

This is a short term buy, long term sell signal right? Banks are no longer squeezed and solvency is easier to maintain. OTOH, Banks profits will be down long term as they have to slowly eat and swallow their losses.

It also could effect housing prices since banks won't feel the pressure to sell REOs. They can just sit on them to avoid realizing losses.

Am I right here?

BondsOfSteel Thu Apr 2 12:49:21 2009 CDT #

Money Man says:

Wrong, banks are liquidating REO's en masse beacuse the TARP and Gov't is eating the losses. Thus, improving the banks profitability/balance sheet. What will kill them moving forward is them NOT making any profitable new loans adding new income to existing balance sheet. Why would a bank WANT to make loans with rates this low? They will lend again when rates go up to a more normalized level for any decent risk reward scenerio.

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Money Man Thu Apr 2 14:32:15 2009 CDT #