Friday, March 12, 2010 
The Economist Nails It Again
There isn’t much good coverage of the markets in the states. You have to fly over the pond to The Economist, owned by Pearson, a British conglomerate.
This week, The Economist nails it again in it’s article Banks and accounting standards. Messenger, shot.
I could not agree more with their assessment. I quote:
“IN PUBLIC, bankers have been blaming themselves for their troubles. Behind the scenes, they have been taking aim at someone else: the accounting standard-setters. Their rules, moan the banks, have forced them to report enormous losses, and it’s just not fair. These rules say they must value some assets at the price a third party would pay, not the price managers and regulators would like them to fetch. Unfortunately, banks’ lobbying now seems to be working. The details may be arcane, but the independence of standard-setters, essential to the proper functioning of capital markets, is being compromised. And, unless banks carry toxic assets at prices that attract buyers, reviving the banking system will be difficult.
To get the system working again, losses must be recognised and dealt with. Japan’s procrastination prolonged its crisis. America’s new plan to buy up toxic assets will not work unless banks mark assets to levels which buyers find attractive.”
In the states, the financial reporting on television is far too biased. Any financial channel owned by General Electric should be viewed with extreme caution. General Electric $GE is very over leveraged. Knowing they could not make their dividend, they assured everyone they could.
Peace.
Perhaps this is why Wells Fargo is stating record profits…
Comment by Tim — April 10, 2009 @ 11:06 pm
Changing mark-to-market “standards” is equivalent to the passage of an anti-dog-eat-dog rule.
Comment by Richard Woon — April 17, 2009 @ 11:12 pm
Those who attempt to liken us to Japan in the 90s have the better argument right now than those who attempt to draw distinctions. Still we may continue to see a nice countertrend rally/cyclical bull market. S&P at 1000ish can’t be ruled out.
Comment by matthew herrick — April 18, 2009 @ 8:41 am
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