k9s-4-k8

FASB's New Mark-to-Market Standards: April Fools' Came a Day Late This Year

On Apr 02 07:46 PM User 387814 wrote:

> you are missing that most of these packages are still performing
> well above 90%. What you are missing is M to M has constricted capital
> in such an enormous magnitude that there just isn't much around to
> BUY "these so-called toxic assets". Karen, I'd love to see how you'd
> respond to your mortgage company telling you that because a couple
> foreclosed houses in the area sold at .30/$ that you would have to
> put up addl collateral or paydown your mortgage to that balance even
> though you've paid perfectly the whole time...is your house worth
> .30/$? NO...Would you sell your house at that price? NO...So why
> should the financials be forced to do the same? Over the 80 years
> after M to M was thrown outta the house, banks have had tough business
> cycles but have always came back strong by utilizing BOON CYCLES
> (which is upward expanding yield curves like we've had the past 6
> months along w/ lower priced assets/ better collateral). So what's
> the difference during this boon period as compared w/ the past 80
> years? M to M has artificially tied the banks hands and capital so
> that the banks cant DO BUSINESS in this BOON period... this is their
> hayday!!! It's like cutting toysrus's credit before X-mas, this is
> their most profitable environment, spreads nearing 5% on new loans
> yet M to M has completely destroyed the ebb's and flows/ the economic
> cycle of the financial system and it's doing the same to the economic
> cycle. Before making up wise cracks, research what M to M is and
> what the consequences of the rule are.

Exactly! I'd only add to that the colossally stupid fact that because many had made mark to market into a religion of sorts, taxpayers are coughing up hundreds of billions to prop up those reserves. Ultimately, we will see a bigger spread between treasuries and mortgage rates going forward. Banks are going to avoid them like the plague. This will remove one group of buyers. Another group that will stop buying are foreign institutions. That leaves the future in the hands of Fannie Mae and Freddie Mac, or should I say the U.S. taxpayer to hold these securitizations.

The Bane of Broken Balance Sheets

A simple screening of stocks within Yahoo's limited screening comes up with 297 companies with no debt and are cash flow positive. Those certainly aren't broken balance sheets, but neither of an even larger number of companies who might have debt but are cash flow positive, or have no debt but have some writeoffs in the current fiscal year. This isn't only a small percent of those companies that couldn't be classified as having a 'broken balance sheet'.


On Mar 06 01:20 PM dw57 wrote:

> a question not asked, are there any companies that truly do not have
> a broken balance sheet?