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Obama's Donut Economics

How about China and TCK, or-

seekingalpha.com/artic...

Made In America-
seekingalpha.com/artic...

Will the PPIP Bankrupt the FDIC?

It's not the PPIP- it's called the PPIF. I decided not to read the article as soon as I realized you couldn't even get the name right...
www.treasury.gov/press...

Financials Have Run Too Hard and Fast: Tread with Caution

As I said in my article- prices are locked up in the black boxes of the worlds major institutions.
There are roughly $2 trillion such CDOs outstanding against which those investors borrowed as much as 13 times the amount they raised in equity from investors, up from nine to 10 times as recently as late 2005 -- let's say $20 trillion -- to amplify the returns on the CDOs.

The unpaid price related to over $2 trillion in outstanding CDOs against which those investors borrowed as much as 10 times the amount they raised in equity from investors- reveals a black box of almost $ 20 trillion if all banks took possession of all the CDOs. As investors couldn't come up with this collateral, the write-offs are about $19.8 trillion. I believe, in fact, the current amount is far greater. The IMF's report of $4 trillion is a white-washed best-case scenario in regard to toxic assets. If one wants to talk about systemic risk - herein lies the $20 trillion black hole. In other words, it is imperative that the system stabilizes as soon as possible, for the alternative is disaster...


On Apr 07 03:29 PM cwr6 wrote:

> prices prices prices. Can't ignore prices. Yeah, you might pick
> the one that might end up belonging to the government but odds are
> they all won't (as you mentioned). So why not stay in the game given
> these great prices?

The Big Banking Emperors' New Clothes

bloggingstocker.blogsp...

FASB's FSP Decisions: Bigger than Basketball?

bloggingstocker.blogsp...

The FASB Rally: More Dishonest Breathing Room For Banks

bloggingstocker.blogsp...

Geithner Creates Buying Opportunity in Financial ETFs

You're over-thinking the situation...simply put- the faster the market runs because of M2M, returning of TARP. etc, the less chance Obama and company have using taxpayer fear to shovel through all the things they want to get enacted- and limits the ability of the administration to get into the banks' board rooms. A strong bullish market is the ultimate "mustard seed" for a strong consumer and corporate resurgence.

FASB Unlikely to Suspend Mark to Market

Well said...finally- a comment from someone that has nailed it to a "T" (and a dotted i)


On Mar 13 01:39 PM Bill Herbert wrote:

> As a CPA, I am 100% in favor of modifying Mark to Market Accounting
> for circumstances such as we are now in. To pretend that we have
> anything resembling a normal market is utterly laughable, and therefore
> it is ludicrous to mandate that a bank must take a very low mark
> on an asset pool that, as one poster says, has a much higher PV based
> on cash flows, given all known defects and reasonable expectations.
>
>
> The SEC has been an abomination for years, and I frankly don't think
> much of FASB either. The SEC has completely dropped the ball in its
> most important function, which is of course to police markets and
> try to eliminate front-running, market manipulation, fraud and so
> on. They have done an absolutely terrible job at that task for at
> least ten years, and worst by far under the term of Cox and several
> of the disgraceful Republican 'free-market' commissioners of the
> past few years.
>
> So what did they do? They decided to implement FASB 157 in a strict
> sense without having any guidelines as to market effects or illiquid
> markets. Thereby, they created an enormous self-feeding financial
> panic that has so far led to grievous harm and tremendous economic
> loss.
>
> I cannot blame them entirely for the conditions that led up to the
> panic - grossly off-the-charts fraud and corruption on Wall Street
> and the mortgage markets. Part of the bad behavior was due to sheer
> greed and flawed models, and even a very effective regulator would
> have stopped a good bit, but not all.
>
> I liken it to striking a match after allowing a bunch of vandals
> to pile up tinder and douse it with kerosene. The SEC in its perverse
> way did great harm to a market that they were supposedly trying to
> help function effectively.
>
> FASB on the other hand has a long history of issuing very long, complicated
> and sometimes tortuously contradictory "statements" that make accounting
> cumbersome, way too open to different interpretations, and often
> very easy to manipulate. The FASB really needs a complete overhaul
> - I would suggest that they get rid of most of the academics and
> theorists, many of whom have never done much more than issue a bunch
> of white papers at universities - and put a panel together consisting
> of industry controllers and CFOs, as well as a few executive types,
> like for instance Larry Bossidy.
>
> I would also include several ombudsman-type people from the real
> world, who might best be described as "investor representatives"
> who would ensure a common thread of transparency and accurate reporting
> that is useful, relevant, and very accessible to the average investor.
>
>
> They would certainly benefit somewhat from suggestions from Wall
> Street, but that should be limited to a comment period. Nobody who
> is a banker or has a large financial interest in a company should
> be allowed to help write the accounting rules, especially not brokerage
> execs.
>
> Mark to Market should be modified to ensure that there is an active,
> functioning market, to be used as a reference - when there is none,
> it simply doesn't apply.
>
> Off Balance Sheet entities are a complete joke, always have been,
> and should be immediately scrapped.
>
> The whole idea should be to simplify instead of compound the problems
> and complexity, which is what FASB seems very good at doing.
>
> It should also greatly simplify and streamline the Sarbanes-Oxley
> documentation process, establishing a clear standard and usable templates,
> so that the "Big 4" accounting firms can stop ripping off their clients
> by forcing them to jump through 100 useless and totally insane hoops,
> all while the accountant's meter is running.
>
> No wonder people hate accountants - they did it to themselves through
> the utter stupidity and self-enriching nature of the system they
> constructed for the business world.

How the U.S. Banking System Was Madoffed by the FASB

FASB 157 was issued in Sept 2006, not in 2007.

www.securitization.net...

I didn't read the rest of your article because you couldn't even get the date of issuance correct. If you're going to write an article on this very important subject matter- at least do some basic research.

bloggingstocker.blogsp...

Financial Times Debunks Citi's Memo

bloggingstocker.blogsp...

Citigroup Questions

This propelled the market:
bloggingstocker.blogsp...

Trading the Mark-to-Market Modification (Updated)

The powerful Group of 30's Chairman is Paul Volcker- who is now one of Obama's key advisors. Volcker is the former Fed Chairman who got the US out of the early 80's financial crisis. Another member is the G30 is none other than Tim Geithner. www.group30.org/member.../

The G30 is pro revisiting M2M and making changes- which will be major market movers..

Section 12 of the G30's recommendations:

www.group30.org/pubs/r...

Fair Value Accounting
Recommendation 12:

a. Fair value accounting principles and standards should be reevaluated with a view to developing more realistic guidelines for dealing with less liquid instruments and distressed markets.
b. The tension between the business purpose served by regulated financial institutions that intermediate credit and liquidity risk and the interests of investors and creditors should be resolved by development of principles-based standards that better reflect the business model of these institutions, apply appropriate rigor to valuation and evaluation of intent, and require improved disclosure and transparency. These standards should also be reviewed by, and coordinated with, prudential regulators to ensure application in a fashion consistent with safe and sound operation of such institutions.
c. Accounting principles should also be made more flexible in regard to the prudential need for regulated institutions to maintain adequate credit loss reserves sufficient to cover expected losses across their portfolios over the life of assets in those portfolios. There should be full transparency of the manner in which reserves are determined and allocated.



On Mar 07 05:08 PM StevieDeee wrote:

> May I suggest a simple approach to determining the value of assets
> for the purpose of assigning a market value... use a multi year rolling
> average of historical values... think of it as medicine for a bi-polar
> disorder...

Trading the Mark-to-Market Modification (Updated)

Your hypotheses are incorrect- M2M has forced marks on assets not designed to be covered under a one size fits all model- and if fair value is accurately and fairly applied, then the books and requirements of many institutions would be immediately impacted (to the positive side).

Your notions reflect certain pundits who do not understand M2M- nor its original intention. Current bank valuations, TARP dilution or potential dilution notwithstanding, do not reflect M2M if fairly applied.

I wrote the article above not only as a trading opinion, but to enlighten people like you as to what is coming in the financials- and other w/ broad market and derivative market issues. Short sellers keep holding onto some errant notion that toxic assets are still on the books, so stock prices reflect this- but, not only are toxic assets not a one size fits all accounting issue, there are related derivative issues as well.

One way or another, all these bad assets are being addressed- the public/private partnership, adjustments to fair value actually applied, including at the discretion of the regulator- rather than automatically applied.

Once completed- TARP dilution aside in certain cases, the current stock valuations are ridiculously low. And, yes, there are companies who might be considered to be solvent, rather than insolvent.


On Mar 07 09:48 AM Totffe wrote:

> I think market to market accounting was a good idea applied in a
> mindless way, particularly since no one thought through how it might
> affect the calculation of banks' regulatory capital.
> The reason that suspending it may not do any good is that all the
> damage has already happened. If we do suspend it, are we going to
> tell financial instituions that they can just write-up the value
> of their assets based on some other standard? That's equivalent
> to saying, "yesterday we said you were insolvent, let's pretend today
> that you aren't." Or, after all this carnage, we would be like
> Rosanne Rosannadanna: "Never mind".
> The one way I could see it working, is that the rules specify some
> different standard for asset values which is used only for the purpose
> of calculating capital adequacy for the banks and doesn't apply to
> general financial statements. That might ease the pressure on banks
> so they could loan more, without having them write up the assets
> on their GAAP books--which no one would believe. The danger is that
> the calculation of capital adequacy would be detached from GAAP accounting
> and expose the banking system to more "cooking of the books". It
> is too late to suspend M2M with any credible good coming of it.<br/>

Financial Stocks: Playing the Mark-to-Market Suspension

There are several elements of the current M2M which need to be resolved rather than using the "one size fits all" rules under FASB 157- marking certain assets at maturity, assets trading in illiquid/liquid markets, assets marked in regard to a company's model, assets not easily "discovered" etc - to which, if modified/resolved, would help companies be truly transparent and potentially show many companies to be stronger, less underwater and in certain cases, no longer insolvent.

Furthermore, while the govt is trying to figure it all out- including the public/private partnership, some have also recommended suspending M2M.

There is nothing wrong with M2M bringing transparency to investors as to a company's position- but, true transparency has proved to be quite complicated (and unfair in many cases) in the real world.

www.cfo.com/article.cf...

The powerful Paul Volcker, now one of Obama's key advisors, is a big advocate for modifications of the current M2M- which if made- would be a major game changer. And, financial stocks, for example, would not be a place to be short selling.

So when you hear certain finance TV anchors (who have very limited or no economic cred) say that suspending or modifying M2M won't "do anything"- take it with a grain of salt. In fact, at very least, there will definitely be some "tweaks" made- which will be game changers in themselves- assuming that Obama really wants the game to change...

On Feb 20 04:17 PM PDT wrote:

> Well said!

Financial Stocks: Playing the Mark-to-Market Suspension

Members of Congress, the Prez, his Cabinet and all his advisors should all be required to have at least 6 months of stock trading experience, in addition to 3 months hashing it out on the message boards, before they would be allowed to take office...now wouldn't that be somethin;...


On Feb 16 10:45 AM RReagan wrote:

> Cockeyed - Sometimes the government just doesn't know what is best,
> or sometimes they just answer to their constituencies. They don't
> take pleasure, they just don't seem to care unless its best for them.
> If they were doing the right thing, why haven't they suspended mark
> to market already? Just remember, Obama has ZERO executive experience
> so don't expect a great decision maker anytime soon.