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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: The Reaper who wrote (99999)	11/28/2008 6:34:32 PM
From: Hawkmoon	1 Recommendation Respond to of 110194

What's still up in the air is how everyone should "mark to market" their various assets, especially in markets deemed inactive and "not orderly" Yep.. there lies the rub. In October, FASB basically came out and told corporations to use their own "significant judgement" in determining value of assets. HELLO!!!!: "In determining fair value for a financial asset, the use of a reporting entity's own assumptions about future cash flows and appropriately risk-adjusted discount rates is acceptable when relevant observable inputs are not available," it said. thedeal.com fasb.org So.. I have to ask what good is FASB 157 when it was basically just "revoked" in a manner where reporting entities can assign value (as they did prior)? The problem is that their accounting firms are loath to sign off on anything other than the most conservative M2M assumptions when their is any form of market, even if inherently illiquid and valuing their assets at substantial depreciation (even when performing). And while many companies (especially the monoline insurers) have written off substantial portions of their impaired assets, their accountants might be hesitant to sign off on writing them up. It's all just really screwed up and the FASB knows they stepped on their Johnsons.. (or did it on purpose).. Hawk

To: The Reaper who wrote (99999)	11/28/2008 7:10:01 PM
From: Hawkmoon	Respond to of 110194

Kirby.. Here's another bit of good reading from Colin Twiggs and he also references the BS going over M2M "Fair Value" accounting of assets. Pay special attention to that "shadow banking system" chart showing the massive deleveraging: incrediblecharts.com The only way I can see this ending is if the financial sector quits arguing about the applicability of fair value accounting and writes down troubled assets to zero. Then the taxpayer provides truckloads of new capital to restore their balance sheets. Not something that existing shareholders will readily agree to, unless they stand to benefit from the eventual recovery in troubled asset values. Nor something that taxpayers will wholeheartedly support, but decisive action needs to be taken before the contagion does further damage to Main Street. Personally, I think it's insane to force a company to mark down an asset that is performing as expected. They should only be required to mark them down according to their CURRENT impairment, or at most what is perceived to be the impairment within 6 months. At least there should be a waiver until the current CDO entities expire (I think most only have a life of 5 years or so). Again.. M2M and Fair Value accounting lies behind the greatest portion of this financial crisis. It's created deflationary expectations that can be manipulated via short-selling activities. But hey.. What the hell do I know?? I'm just a schmuck private investor/analyst.. not some wharton business school grad.. ;0) Hawk