tag:blogger.com,1999:blog-6568749253826790814.post2355824439091123493..comments2024-01-05T10:11:27.498+00:00Comments on Soot and Ashes: The World AFTER the Crash: Like it or not, on April 2, 2009, the January 2008 FASB fuel-on-the-fire mark-to-market change will be reversed. Get ready.bloggerhttp://www.blogger.com/profile/06585266242070350399noreply@blogger.comBlogger39125tag:blogger.com,1999:blog-6568749253826790814.post-15423570605028552262009-03-19T03:10:00.000+00:002009-03-19T03:10:00.000+00:00great post. more of these less of the conspiracy....great post. more of these less of the conspiracy. <BR/><BR/>like the baseball card analogy. a few important differences. in this case he baseball card is paying cashflow and the MBS market is $9 trillion. <BR/><BR/>So part of the value is in the cashflow and a small change in the rule has a big ripple efect accross $9T.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-73231189313210291522009-03-18T04:56:00.000+00:002009-03-18T04:56:00.000+00:00Kieth,I'll say this once and then, I'll say it aga...Kieth,<BR/><BR/>I'll say this once and then, I'll say it again.<BR/><BR/>Nothing is worth more than what someone else is willing to pay for it!<BR/><BR/>Nothing is worth more than what someone else is willing to pay for it!<BR/><BR/>RayNLAAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-33510632965018664612009-03-18T02:48:00.000+00:002009-03-18T02:48:00.000+00:00Very insightful post. I like the analogy.I'm begi...Very insightful post. I like the analogy.<BR/><BR/>I'm beginning to think that even if you're wrong in the post and mark to market causes assets to be overvalued, so what if we have somewhat ficticious accounting to keep the party going. I really don't want to live through Great Depression II. The economy is and always has been a house of cards.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-34533017514428820632009-03-18T01:54:00.000+00:002009-03-18T01:54:00.000+00:00Ok,,,, so "mark-to-market" works just fine on the ...Ok,,,, so "mark-to-market" works just fine on the way up,,, but now that the assets are down, the banks get to simply change the rules to "mark-to-fantasy". <BR/><BR/>In other words, we have spent trillions of taxpayer dollars bailing the banksters out from under these toxic assets, which will now magically become valuable by the mere change in a simple accounting rules??? <BR/><BR/>As taxpayers, we have been raped, mauled and spat upon...Nothing will ever be the same.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-77134995593182249512009-03-17T22:53:00.000+00:002009-03-17T22:53:00.000+00:00The rule won't be erased. It may be tweeked at be...The rule won't be erased. It may be tweeked at best.<BR/><BR/>Any savy investor will know this will not make bad loans go away.<BR/><BR/>This is a "nothing burger".<BR/><BR/>Just more delay tactics.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-7113027589302026382009-03-17T22:50:00.000+00:002009-03-17T22:50:00.000+00:00Ah yes the Mighty Karnak will hold the envolope up...Ah yes the Mighty Karnak will hold the envolope up to his forhead while the banker makes the guess.<BR/><BR/>The new mark to market rules.<BR/><BR/>Just what we need.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-24884327790007643772009-03-17T21:59:00.000+00:002009-03-17T21:59:00.000+00:00Keith, I get what you are trying to say with the b...Keith, <BR/><BR/>I get what you are trying to say with the baseball card example but the problem is that the card only has value because people believe it does.<BR/><BR/>The same goes for a lot of this illiquid crap the financial firms hold.<BR/><BR/>It only have value if you hold it for 30 years and then it still may be a money loser.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-53085922793436150242009-03-17T21:56:00.000+00:002009-03-17T21:56:00.000+00:00my lehman stock certificates are very illiquid rig...my lehman stock certificates are very illiquid right now. Perhaps I shouldn't have to mark to market.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-42386910380841818862009-03-17T21:55:00.000+00:002009-03-17T21:55:00.000+00:00problem is that companies will abuse not having to...problem is that companies will abuse not having to mark to market. they will mark to fantasy or whatever they need to cook the books.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-11598399366557477522009-03-17T21:53:00.000+00:002009-03-17T21:53:00.000+00:00hey, if the reinstate the uptick rule then they s...hey, if the reinstate the uptick rule then they should have it the other way. make it so you can only buy on the down tick.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-22650141759064438052009-03-17T21:40:00.000+00:002009-03-17T21:40:00.000+00:00S&A's Quote of The Day:"These days ma...S&A's Quote of The Day:<BR/><BR/>"These days man knows the price of everything, but the value of nothing.”<BR/><BR/>Oscar WildeAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-2632025321477470992009-03-17T18:53:00.000+00:002009-03-17T18:53:00.000+00:00Keith-I think London is getting to you. Your "sign...Keith-<BR/><BR/>I think London is getting to you. Your "significant judgment" in valuing baseball cards isn't worth a hoot if the rest of the planet isn't like minded. It's just a baseball card, paper and ink, and IMHO $0.10 is a pretty steep bid considering the replacement cost to make another one.<BR/><BR/>Which forces you to retort (let's say it together); "but, they're not making baseball cards anymore!"Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-26356451837972733842009-03-17T18:43:00.000+00:002009-03-17T18:43:00.000+00:00Market manipulation. When are we going to learn th...Market manipulation. When are we going to learn that there is always consequences, that the field is never level, special interest will be served, and that institutions that would never have survived are going to.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-77837407396596962272009-03-17T17:49:00.000+00:002009-03-17T17:49:00.000+00:00Now that sane accounting is on it's way, it is a r...Now that sane accounting is on it's way, it is a race between 5% NIM spreads vs charge-offs. I'm betting on the big banks, but this battle is far from over.<BR/> <BR/>Anton Chiguhr<BR/><BR/>You've got to hand it to the hedgies and PE thieves, they wanted to buy US real estate for 5¢ on the dollar instead of 50¢ - 70¢. Can't blame them for wanting a deal, but do I blame them for trying to destroy America, by making a bad situation worse.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-87165051895033089292009-03-17T16:48:00.000+00:002009-03-17T16:48:00.000+00:00So, predictions, what does this mean? Market up, ...So, predictions, what does this mean? Market up, down? Ive read it twice and im still confused. Can the banks now keep lying?jimhttps://www.blogger.com/profile/02523525193865747028noreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-48426853591631939272009-03-17T16:37:00.000+00:002009-03-17T16:37:00.000+00:00isn't 99% markdown from $100 a dollar, not 10 cent...isn't 99% markdown from $100 a dollar, not 10 cents?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-11777301889606937822009-03-17T16:32:00.000+00:002009-03-17T16:32:00.000+00:00keith,you're smart enough to know that what the ba...keith,<BR/><BR/>you're smart enough to know that what the banks are going to do is make wild ass guesses using their rigged financial models to assign a value based on net present value of future cash flows. They will bake in the rosiest assumptions, inflate the value of the assets -- which will still be much lower than what they are worth -- and then sell them to the Feds via TALF or some other program. <BR/><BR/>Then, when they have unloaded all their assets, they will tank and the american people will be left holding the losses. The banks get a decent amount of money in return for selling us toxic rot and they laugh all the way to the...well, bank.<BR/><BR/>Mark-to-market should not be removed but it should be modified, and already has been, to include REALISTIC modeling of future cash flows. <BR/><BR/>"On September 30, 2008, the SEC and the FASB issued a joint clarification regarding the implementation of fair value accounting in cases where a market is disorderly or inactive. This guidance clarifies that forced liquidations are not indicative of fair value, as this is not an "orderly" transaction. Further, it clarifies that estimates of fair value can be made using the expected cash flows from such instruments, provided that the estimates reflect adjustments that a willing buyer would make, such as adjustments for default and liquidity risks.[12]"<BR/><BR/><BR/>So, yes; what's going to happen is that the FASB is going to say "use a financial model" to value the assets...BUT, you have got to take into account all of the realistic economic dynamics re: unemployment, gdp, risk, liquidity, inflation, default rates, etc.<BR/><BR/>The big question is: will the banks do this?<BR/><BR/>My bet is that the banksters will throw caution to the wind and bake in the rosiest assumptions they can, unless there is strict oversight on the assumptions used, but I doubt this can be done.<BR/><BR/>So, they will lie and we will have "mini-bubble 2" which will last for a while...just long enough for them to unload the assets on the govt. at a "fair" price. then, after everything's unloaded, the value will come crashing down because of the erroneous assumptions used: i.e., reality sets in with all the atl-a, option arm, prime loans defaulting.<BR/><BR/>but this time, the banks won't be lending money for mortgages at all -- or not nearly like they did before - so they won't get hurt in the second crash. however, the American people will get creamed because we will now hold all the toxic assets.<BR/><BR/>So, Keith is right: this rule is going to change. It may mean something additional for the market -- although a lot of it has been baked in now - in the short run. You still may be able to make some money from bank and related financial services stocks; maybe even some real estate stocks. but it won't be like before because the big bubble machine has been stopped...for now.<BR/><BR/>at the end of the day, the Feds are going to bailout the banksters by buying overpriced assets, forgiving borrower principle, and subsidizing mortgages so they are no more than 31% of gross income. That's where all of this is going.<BR/><BR/>Just goes to show: crime does pay.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-11741857401053096162009-03-17T16:13:00.000+00:002009-03-17T16:13:00.000+00:00Silly Keith & Co, can't you see that this ...Silly Keith & Co, can't you see that this fake economic crisis was created to buy assets for pennies on the dollar and pass agenda? An old strategy that has been applied by every powerful crook in history, from the Rothschilds to Rockefellers and JP Morgan.<BR/><BR/>Nothing will improve until the crooks who engineered this crisis have acquired enough assets to fleece everyone else, including natural resources in emerging countries.<BR/><BR/>The commercial real estate hasn't even blown yet and you're already talking about mark-to-market changes? Why, do you think that these crooks will be making everything tip-top that quickly to have competition in acquiring cheap assets? They'll force the competition into bankruptcy first, and that doesn't take 6 months and sectors (like tech) with P/Es of 19 during a deep recession. Does that look cheap to you?<BR/><BR/>See, that's the problem with the book smart crowd that acts like robots. You've gotten to see the big picture, have the gut feeling, compare with the other heists in history, understand how the system is rigged.<BR/><BR/>You people look like those straight A doctors who never find the problems by gut feeling or intuition because it's not in the medical school book or the symptoms deviate a bit from their robotic way of thinking. Very smart, but very dumb at the same time.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-10894788175376480952009-03-17T15:53:00.000+00:002009-03-17T15:53:00.000+00:00The same homeowner has as much right as the bank t...The same homeowner has as much right as the bank to mark his investment to fantasy too.<BR/><BR/><BR/><BR/><BR/>HERE! HERE!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-8516190512008267282009-03-17T15:46:00.000+00:002009-03-17T15:46:00.000+00:00This explains Market to Market suspension quite we...This explains Market to Market suspension quite well<BR/><BR/>http://www.tickerforum.org/cgi-ticker/akcs-www?post=87293Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-60291941921738364592009-03-17T15:04:00.000+00:002009-03-17T15:04:00.000+00:00I have determined the future value of my comment h...I have determined the future value of my comment here to be $1, 000,000. So if you are reading this - pay up asshole!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-9072360986286073012009-03-17T13:57:00.000+00:002009-03-17T13:57:00.000+00:00Then it's time to stop shorting bank stocks.Then it's time to stop shorting bank stocks.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-78265945968057294512009-03-17T13:28:00.000+00:002009-03-17T13:28:00.000+00:00I agree. To me it seems much like following the D...I agree. To me it seems much like following the DOW to get an indication of the general health of the stock market - that is to say a bit asinine. DOW components are routinely brought in and ushered out depending upon the direction of the wind and the performance of the individual companies. When you are losing the game, it is helpful to be able to go re-write the rule book and change the field dimensions. This "do-over" on accounting rules seems much the same but I believe that Keith is right in that it will cause a momentary shift in the direction of markets overall. In the long run will it make a difference - maybe and maybe not but it bears watching. Accouting rules are a two edged sword and they can make or break a company or a bank. Then can instill confidence, fear and in this case, I suspect a temporary sense of false hope.<BR/><BR/>Smug BastardAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-9191842818514850522009-03-17T13:03:00.000+00:002009-03-17T13:03:00.000+00:00oh yeah, right. it was mark to market, not levera...oh yeah, right. it was mark to market, not leverage. right, i forgot.<BR/><BR/>sorry.<BR/><BR/>confidence lost, like paradise.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6568749253826790814.post-83732325113713515862009-03-17T13:01:00.000+00:002009-03-17T13:01:00.000+00:00As the token CPA here I will represent my professi...As the token CPA here I will represent my profession in taking full blame for the entirety of the financial crisis...<BR/><BR/>If noone is buying a particular investment and noone wants a particular investment - it has no value. If an investment is illiquid and I can't get cash for it tomorrow - it has no value.<BR/><BR/>I'll tell you the effect:<BR/>1)Companies are going to use ridiculously slanted models that present value the future cash flows of these instruments. <BR/>2)They will use shiny, sunny and unrealistic assumptions upon which they base the model. <BR/>3)The auditors will happily sign off on these models. <BR/>4)Future cash flows will never meet the assumptions made in the model as more mortgages (Alt-A, Opt-Arm heck - even prime) go belly up. <BR/>5)Balance sheets will once again appear strong even though they are holding highly toxic paper. This is exactly where we were three years ago. <BR/><BR/>Subquestion:<BR/>How soon after things turn around will the call for a return Mark-to-Market accounting be trumpeted.Anonymousnoreply@blogger.com