JohnL

Bernanke Is Right: 'Transparency' Is Important

-- The root of the "problem" that the world financial system is facing right now, and the ultimate cause of this problem, is that neither US GAAP (nor indeed IFRS) can conceive of a valuation of an asset that has two or more radically different "values" at the same time, depending on the purpose of the valuation. --

My eyes always stop scanning when an author identifies the "root cause" of the current financial problem. My question: why has an accounting challenge become so important all of a sudden? Is it not because the severity of the boom elevated asset prices so high in relation to the bust-prices seen now? Accounting valuation differences merely reflect the severity of the boom-bust cycle that swept up so many bankers and investors.

Might we not say that almost any accounting method would be adequate if the cycle was greatly moderated? Thus, I would assign more attention to the credit cycle than to accounting rules. I blame the monetary elasticity of fiat money and fractional-reserve lending for the cycle, but that is a debate for another day.

Obama and Bush: Different Objectives, Same Results

-- President Bush thought common shareholders in financial institutions should be massacred to preserve Darwinistic capitalism. --

What other kind of capitalism is there? I thought that capitalism was a system in which those that are less successful at satisfying customer wants in a profitable manner, lose money, lose business and eventually lose their investment. The resources at their disposal get picked up by someone more successful. I'm confused (again).

Visceral Loathing for AIG's Failures

I share the author's sentiments, but I think they could have been expressed without resorting to vulgarity.

Three Reasons Why Investors Should Worry About Bank Nationalization

The guys in Washington, who receive most of their campaign support from large corporate interests, are picking winners and losers. This is a violation of property rights. Even if you don't have ownership in one of the non-favored banks, as a citizen you should be outraged that this is happening in America.

Five Laws That Government Should Pass

"Sure, the interest rates are set by the “market”, and the Fed only determines the discount rate, but the fact that a credit card company can dip into a near-infinite pool of taxpayer money is mind-boggingly stupid."

Interest rates are not set by the market, since one half of the market, Supply, is controlled by the government.

The fact that ANY company -- even a bank -- can dip into a near-infinite pool of taxpayer money is mind-bogglingly stupid!