4eyedbuzzard

Thinking the Impossible: Could Bank of America Go to Zero?

Posted by GRS >>>"...The real problem now is "mark to market" accounting...."<<...

I would comment that it is precisely mark to market accounting in the real estate sector, coupled with Fed interest rate policy, that fueled the hyperinfaltion in RE prices and the resultant mortgages that were securitized by them. People profited by cashing out on inflated RE, as did the mortgage originators and banks. And everybody was very happy with mark to market as long as prices kept going up. But that bubble has now burst, and both RE and business equity values are falling to a more realistic valuation. But you can't have mark to market accounting only on the way up when prices are appreciating--when you want it. You have to deal with it on the way down too. The pain from the excessess of both private individuals, corporations, banks, and government will be severe. But we will not move forward out of this crisis until the market sorts out the winners and losers. And no amount of government intervention will do anything other than delay and/or soften the landing.

And then when this is all over, we can look forward to the legacy of additional massive public debt that will have been created, add it to that little SS debt we've been ignoring, and either raise taxes through the roof or print money hand over fist to pay it off with worthless dollars. It just ain't gonna be pretty anyway you look at it.

Stupid Is as Stupid Does: The SEC and CFTC Legalize Electronic 'Gambling'

As opposed to say ownership of stocks, which largely fits the same description(speculativ... no direct connection, mongering for profits)?

There's a simple solution to the CDS problem: if you don't want to insure 'em, don't write 'em.