A friend of mine sent me an inspirational piece entitled Born Again American. It brought a tear to my eye, and I intended to write about it this week. Instead, I have decided to use it as a topic for the main blog next week. I am too frustrated and feel like a bona fide rant this morning.
What the hell is the matter with those jack asses in Washington? Over the past several weeks, I have written numerous times about the folly of the “mark to market” accounting rule. It is destroying our country. I have come to the conclusion that there is some hard-headed idiot who made the decision as to how to implement the rule and is now refusing to admit that it was a mistake, and God forbid, he/she might have been wrong.
Look, everybody wants a fair estimation of the worth of a company. But understating the value of an asset is just as wrong as over stating the asset. The fact of the matter is that no one seems to know how to value derivative assets or we wouldn’t have this problem in the first place. What I do know is that the paralysis on this issue has transformed a difficult situation into a geometrically growing downward spiral that is destroying our financial system. These derivative bonds, the so called “toxic” assets, are backed by real assets. They are worth something. To assume they are worthless is just plain wrong.
The financial tsunami is a paper tiger. In case you don’t know it, our entire financial system is based on thin air. Those dollar bills with which you buy your groceries are actually worth about as much as a jar of…well, you know! Probably less!!! They are physically worth the cost of the paper and ink. They are worth something more because we choose to believe they are worth something more. In the old days, our money was based on actual silver and gold reserves. Those days are long gone. Now the value of our money is based on a complicated formula rooted in the full faith and credit of the United States government; in other words, nothing.
The toxic assets, on the other hand, do have something backing them. They are secured by houses and automobiles. Given how weak the dollar has been against other currencies over the past few years, maybe I would prefer a toxic asset. Even when the dollar has gone up vis-à-vis the Pound and Euro, it is still substantially weaker than it was just a few years ago when the Euro was a joke. Given that the government is now embarking on the largest spending bill in the history of our Union, inflation may make those toxic assets look more and more attractive.
Just so you know, the “mark to market” rule, as it is currently being enforced, has only been around since 2007. This isn’t some long standing principle upon which our economic system is based. So its modification to provide for a realistic value of bank assets is not that big of deal. This new way of looking at bank assets is destroying us.
My late Aunt Josephine used to say some people are so smart they're stupid. That is the case here. It is time to modify the "mark to market" rule.
What the hell is the matter with those jack asses in Washington? Over the past several weeks, I have written numerous times about the folly of the “mark to market” accounting rule. It is destroying our country. I have come to the conclusion that there is some hard-headed idiot who made the decision as to how to implement the rule and is now refusing to admit that it was a mistake, and God forbid, he/she might have been wrong.
Look, everybody wants a fair estimation of the worth of a company. But understating the value of an asset is just as wrong as over stating the asset. The fact of the matter is that no one seems to know how to value derivative assets or we wouldn’t have this problem in the first place. What I do know is that the paralysis on this issue has transformed a difficult situation into a geometrically growing downward spiral that is destroying our financial system. These derivative bonds, the so called “toxic” assets, are backed by real assets. They are worth something. To assume they are worthless is just plain wrong.
The financial tsunami is a paper tiger. In case you don’t know it, our entire financial system is based on thin air. Those dollar bills with which you buy your groceries are actually worth about as much as a jar of…well, you know! Probably less!!! They are physically worth the cost of the paper and ink. They are worth something more because we choose to believe they are worth something more. In the old days, our money was based on actual silver and gold reserves. Those days are long gone. Now the value of our money is based on a complicated formula rooted in the full faith and credit of the United States government; in other words, nothing.
The toxic assets, on the other hand, do have something backing them. They are secured by houses and automobiles. Given how weak the dollar has been against other currencies over the past few years, maybe I would prefer a toxic asset. Even when the dollar has gone up vis-à-vis the Pound and Euro, it is still substantially weaker than it was just a few years ago when the Euro was a joke. Given that the government is now embarking on the largest spending bill in the history of our Union, inflation may make those toxic assets look more and more attractive.
Just so you know, the “mark to market” rule, as it is currently being enforced, has only been around since 2007. This isn’t some long standing principle upon which our economic system is based. So its modification to provide for a realistic value of bank assets is not that big of deal. This new way of looking at bank assets is destroying us.
My late Aunt Josephine used to say some people are so smart they're stupid. That is the case here. It is time to modify the "mark to market" rule.
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