Rumpole

EU Eases Mark-to-Market Rules; What's the U.S. Waiting For?

"...M-T-M, recall, requires companies to mark their financial assets to market each quarter, and run the price changes through their
P&L. For assets that trade on liquid markets, that makes sense. But if the asset is illiquid, or trades in a market that occasionally (like now) freezes up, “market” prices can often be totally unrelated to the asset’s actual intrinsic value. In cases like that, all MTM accounting does is blow up a company’s balance sheet for no reason."
For no reason?? Perhaps the part of the cycle we're now in is saying something about how you're calculating intrinsic value? You're assuming that your version of "intrinsic value" is somehow stable and enduring. But I think that assumption has got to be questioned now that the credit/debt bubble has been popped and the excess cash being pumped into the system is being sucked down the drain of debt and "intrinsic value" is being sucked down that same drain.

In effect, what you're saying is that when times get tough, let's re-write the rules so that we can fudge the books. Who exactly does that help??!!