Lou Thomas

10 Financial Entities On the Brink

Fascinating item on held for sale vs. held to maturity asset reporting. Certainly, creative accounting is a major hiding place for future writedowns. A lot of de facto insolvencies are no doubt being hidden by such tactics.

And yes, foreign investors have already lost their shirts on financials, and so are reluctant at this point to lose their trousers, as well. So, there goes another possible way of postponing massive insolvencies. How long will it be before CDO assets have to be sold for their true worth? Merrill Lynch just unloaded a bunch of these for a tiny fraction of their mark to model value, and they had to finance that purchase with their own money!

Hey, you guys who are tearing into Mish regarding this column: if you are such bulls, then how come you appear to have been hibernating in a cave during the bulk of this crisis? Wake up and smell the burning mortgage-backed paper.