Timmothy Posey

Monday's Options Recap

Roubini has been predicting a recession and Dow 5k since 1997. I think everybody has forgotten he is a pariah and has only gotten attention lately because he was finally right about an oncoming recession.

Even a broken clock is right twice a day.

Mark-to-Market Marches Towards Extinction

M2M is already "waived" when there is no liquid market. Read up on the FASB 157 clarification from September 2008 where they specifically state and cite the MBS market since it does not work when there is no "orderly transaction".

M2M is just a political rallying cry for many banks so they can go back to Mark-to-whatever-I-fee... and have huge write-ups.

And let's pop the myth now that M2M is for all assets. It's not, it's only for trading assets that are not intended to be held to maturity. Thus, if your neighbors are selling their houses all for $10k, and you are selling a very similar house for $200k, you're probably a little overpriced, and thus the market reflects that. If you aren't selling your house, you don't have to worry about any margin calls or anything like that since you are holding to "maturity".

However, insurance companies are probably the only ones targeted unfairly in this case. Insurers are required to post all of their assets at fair value at any given time (since there may be a sudden outbreak of hurricanes or bird flu and they need to sell those assets immediately).