Moon Kil Woong

If a Bubble Bubble Bursts Off the Balance Sheet, Will Anyone Be There to Hear It?

When you can claim gains on an asset and choose to hide losses you are just asking for it. That is not accounting it's fraud. Allowing off balance sheet accounting is fraudulent because it is intentionally lying to shareholders if nothing else. Even if accounting allows for it, it is still leads to executive misconduct. As a shareholder, I certainly hope that this issue is brought up someday. Until then I will continue to stay away from financials with derivatives, especially ones that booked derivatives profits before 2008 because they are most likely still sitting on losses that potentially can amount to their entire capital. If they do or not we will never know.

I should say it is probably embarassing to be a corporate accountant these days for financial institutions. You might as well just carry a giant rubber stamp around and replace your entire vocabulary with yes.

Where Are We in This Rally's Lifecycle?

Governmental direct action into the private sector just encourages inordinate risk taking and the perception that bad failed companies receiving baiout money can't go under. This is just creates the oppsite effect we want. It drives money into the worst companies and segments of our economy, gives even greater market share to too big to fail institutions, creates the perception that they can not loose and thus are safer than the safest best run businesses, and exposes the taxpayer and economy to even greater risk.

On a side note, did you just notice how GM after breaking the unions just shifted $293 billion bailout funds to invest in moving their truck manufacturing to China. How on God's green earth does the US taxpayer benefit from financing and aiding that happen? Is this actually helping the American economy?

If the US ends up a destitute 3rd world economy in the next 20 years people will point to our actions the last 2 years as the cause. They will, of course, have a very sound argument.

Nothing Is Ever Truly 'Off the Books' in the Financial World

We can only hope Michael Steinberg is right. Of course, re-instituting Glass Stegall would help seal this type of outcome.

"Their investing banking businesses will become more dependent on traditional capital raising and trading, and their commercial operations will become more dependent on funds processing and traditional banking. When everything remains on the books, the whole operation becomes less profitable, including their prestigious retail wealth management chains."