Albert Meyer

Remember Mark-to-Market?

"Fair-value" accounting isn't accounting at all; it's quarterly books valued at the prevailing hysteria/euphoria of traders.” Tack

Correct. Those in favor of "fair-value” accounting, approach it from a purely theoretical construct. For a market to produce fair values, it has to be transparent, liquid and deep. You can no doubt add more characteristics, without which one cannot trust or rely on the fair values produced. FASB failed to see that Mark-to-Make Believe was a doomsday device. The world is a better place without FASB and the SEC. Both bodies engender a false sense of security.

FASB is an enigma full of contradictions. The fair value of an employee stock option is the difference between the current market value and the strike price. Yet, FASB threw out the intrinsic value approach, which, take note, is the cost that companies deduct as stock-based compensation on their tax returns, and, instead, gave us a 280-page rule-book to calculate the cost of an employee stock options. That way, the obfuscation is so surreal that nobody bothers to question the whole system that essentially transfers wealth from hardworking Americans into the bank accounts of the executive elite who, in turn, bankrolled our members of Congress…. who, in turn, protect the system. Ask yourself the question: Where did the $470 million come from that Countrywide’s Mozilo banked after exercising his stock options? Mostly from people who invested in Index funds, because Countrywide was part of the S&P 500 and Nasdaq. Legalized theft. I could go on…