Story Time with JDH

[davidslane]

For a good read on Mark to Market, read this week's John Mauldin (which I know you ALL subscribe to and read religiously every Saturday morning --- along with JDH's blog).

http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2009/03/06/the-law-of-unintended-consequences.aspx

[MetalMeister]

DSL,

Thanks for the article.  Made for some very interesting reading on MTM.  So I did some research...

What Ron Paul said last October has turned out even more true now:

http://www.youtube.com/watch?v=AmuhQ_RjVTk&playnext_from=PL&feature=PlayList&p=2245DD38B3BD9A59&playnext=1&index=2

Seems there are two different camps on MTM.  The big government camp and the small government camp.

Big government is leaning towards suspending mark to market so institutions don't fail and small government says let all the problems shake out fairly with true value of assets reported daily.


http://www.infowars.com/stimulus-package-is-latest-battleground-in-war-between-ron-paul-and-big-government/

Others want an end to the mark to market accounting rule under which the books of financial institutions are required to show the true value of their assets on a daily basis. An end to mark to market accounting would allow banks and debt institutions to carry loans on their books as though they were still worth what they were before the borrowers stopped making their payments. The thinking is that if the old debt can be dressed up in some kind of way that makes it look better, it will be easier to create new debt.

Suspending mark to market will drive investors from the marketplace because no one will know the true value of assets:

http://www.bloomberg.com/apps/news?pid=20601039&sid=akRiHiLqALsw&refer=home

More Distrust

Were the SEC to suspend the fair-value accounting rules, as many banks and lawmakers have pleaded, investors would distrust corporate financial statements even more than they do already. It also would exacerbate banks' capital problems. When investors don't believe companies' numbers, they flee, making capital- raising more difficult.

So, what can I say in summary? 

We need truth in the marketplace and we are getting it right now whether we like it or not...

[Bottomfeeder]

Thanks for that DSL....I still cant figure out what we are waiting on.  It is truly insane.

The adjustment to the rules SHOULD on its own re-capitalize the banks.  Our current regulations are forcing our banks to operate AS IF we are in the FIRST GREAT GLOBAL DEPRESSION, with 80% defaults which we are not even close to, but being directed towards, with the continuation of these stupid policies.

We only have 11-12% defaults and our government is running around screaming the sky is falling.  Good gracious me!  How bout a little bit of poise from our fearless leaders.

YC.....You cant mark something to market, when there is no market.  Almost like me saying I will buy your house without knowing where it is, or how many bedrooms you have.  Its impossible.  Look at it this way,  if MTM provided transparency on its own, we wouldn't be sitting here not knowing what the assets are.  If there are assets that the banks don't want regulators or private capital to see they just move them over to off balance sheet "level 3" assets anyway, so this MTM, is just a bad expensive joke.

There is huge demand out there too for these distressed assets, as one might expect.  But no, sorry, private investment you cant have them...naanaaa naaanaaa naaanaaaaaa.

Why? Because we don't want the over- leveraged to get hurt.  Huh? 

Even after MTM gets revised, there will still be problems as banks cant trade amongst themselves because of the impending cramdown legislation, which if it does pass, will cause additional third party collateral damage, maybe that would be 4th party, since the taxpayers are the third party, sorry.

Could somebody please just tell the government to go away and read a book or something, so the markets can function again, please!!!

A complete government induced mess, continuing to fester, they are running out of time.  Frankly I don't expect Obama or Congress to understand this stuff, I really don't.  But where in the hell is Summers, Volcker, and Geithner....those guys been moved into protective custody or something?  Geeze.