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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: bentway who wrote (151186)	9/27/2008 1:19:54 PM
From: neolib	Read Replies (3) \| Respond to of 306849

You are attributing 100% of the problem to "bad assets" and 0% of the problem to accounting rules. The accounting rules affect asset prices, which goes a long way towards determining if the assets are "bad" or not. Do a few thought experiments to understand this. Stocks are typically valued based on the last transaction although certain last transactions are more important than others (like the close of the market) which of course leads to manipulation (painting the tape). Damn, who could have thought that an accounting rule could motivate manipulation? RE is typically valued by looking at averages for comparable properties and adjusting for all the factors (size, condition, location, etc). This introduces both spatial and temporal averaging. Why not instead value RE like stocks and set it (still compensating for all the condition variables) by only THE LAST PROPERTY SOLD (no temporal or spatial averaging) or by all properties sold yesterday (no temporal averaging, but extensive spatial averaging) or by only the last 10 properties sold withing a certain distance (which would be some spatial and some temporal averaging), etc. What is the effect of spatial and temporal averaging, and why would a prudent person use them? When you answer that one, please tell us WHAT spatial and temporal averaging extent God wants us to use, because FASB 157 is God, and God is part of the problem currently.

To: bentway who wrote (151186)	9/27/2008 7:09:27 PM
From: Pogeu Mahone	Respond to of 306849

calculatedrisk.blogspot.com Saturday, September 27, 2008 Reports: Fortis Near Collapse, B&B Likely to be Nationalized by CalculatedRisk From the Telegraph: Financial crisis: Bradford & Bingley likely to be nationalised by Treasury The biggest buy-to-let operator is on the verge of being nationalised by the Government as time runs out on attempts to find a private buyer. B&B’s shares will be suspended when the stock market opens on Monday. By that point, the Government will either nationalise the bank or announce a deal to sell it. [T]he deal will require public support, with many of the one million B&B mortgages left with the Treasury. As a result, taxpayers are likely to be left holding the mortgages most likely to default from the £40 billion portfolio. From The Times: B&B and Fortis both in crisis BELGIUM’s Fortis is this weekend poised to become the first large continental bank to fall victim to the credit crunch, as the global chaos continues with Bradford & Bingley and American savings giant Wachovia both teetering on the brink. The Belgian central bank and the country’s regulator are paving the way for a bailout of the huge banking and insurance group, which has a £540 billion balance sheet and a market value of £12 billion. In Britain, the fate of Bradford & Bingley will be decided today. Fren-etic talks between the Bank of England, the Financial Services Authority and the government have been taking place this weekend to save the troubled mortgage bank. ... If no buyers come forward, B&B will be nationalised and broken up. However, while the fate of B&B offers a fascinating insight into the hardship faced by financial institutions, in terms of international significance the problems faced by Fortis are far more serious.