Mark to Market Accounting

[crb]

This is a big problem, I've been saying it for months on this forum. I remember Steve Forbes saying it back in December.

Now, before you partisan people get all in a huff because this is by Newt... remember how you love to cite the Clinton years as an era of good government and growth - whom did Clinton work with on the Hill?



Suspend Mark-To-Market Now!
Newt Gingrich 09.29.08, 6:05 PM ET

Today, Congress voted against passing the bailout package for Wall Street. The stock market reacted immediately, falling almost 800 points. It is clear that something needs to be done, and in the coming days, a new package must be constructed that has the support of the American people that both deals with the liquidity crisis and sets the stage for long-term economic growth.

However, there is an immediate step that could be taken right now that would calm the markets and dramatically reduce taxpayer risk in any future government intervention.

Today the Treasury secretary released the following statement: "I and my colleagues at the Fed and the SEC continue to address the market challenges we are facing on a daily basis. I am committed to continuing to work with my fellow regulators to use all the tools available to protect our financial system and our economy."

While Congress and the White House consider next steps, the Treasury and its fellow regulators should follow their own counsel and take without delay the one regulatory action within their discretion that can help immediately to calm markets and dramatically reduce the taxpayer risk in any necessary government intervention: suspend mark-to-market.

Chief economist Brian S. Wesbury and his colleague Bob Stein at First Trust Portfolios of Chicago estimate the impact of the "mark-to-market" accounting rule on the current crisis as follows:

"It is true that the root of this crisis is bad mortgage loans, but probably 70% of the real crisis that we face today is caused by mark-to-market accounting in an illiquid market. What's most fascinating is that the Treasury is selling its plan as a way to put a bottom in mortgage pool prices, tipping its hat to the problem of mark-to-market accounting without acknowledging it. It is a real shame that there is so little discussion of this reality." (Emphasis added.)

If regulators on their own--or Congress, if regulators fail to use their discretion--can fix 70% of the financial crisis by changing the mark-to-market accounting rule, we should change the rule first before attempting to pass another reevaluated bailout package.

"Mark-to-Market" Accounting and the Origins of the Financial Crisis: Mark-to-market accounting (also known as "fair value" accounting) means that companies must value the assets on their balance sheets based on the latest market indicators of the price that those assets could be sold for immediately. Under such a rule, declining housing prices don't just reduce the value of defaulting mortgages. They reduce the value of all mortgages and all mortgage-related securities because the housing collateral protecting them is worth less.

Moreover, when a company in financial distress begins fire sales of its assets to raise capital to meet regulatory requirements, the market-bottom prices it sells out for become the new standard for the valuation of all similar securities held by other companies under mark-to-market. This has begun a downward death spiral for financial companies large and small.

More foreclosures and home auctions continue to depress housing prices, further reducing the value of all mortgage-related securities. As capital values decline, firms must scramble to maintain the capital required by regulation. When they try to sell assets to raise that capital, the market values of those assets are driven down further. Under mark-to-market, the company must then mark down the value of all of its assets even more.

The credit agencies see declining capital margins, so they downgrade the company's credit ratings. That makes borrowing to meet capital requirements more difficult. Declining capital and credit ratings cause the company's stock prices to decline.

Panic sets in, and no one wants to buy mortgage-related securities, which drives their value under mark-to-market regulations down toward zero. Balance sheets under mark-to-market suddenly start to show insolvency. This downward spiral shuts down lending to these companies, so they lose all liquidity (cash on hand) needed to keep company operations going. Stockholders--realizing that they will be wiped out if the companies go into bankruptcy or get taken over by the government--start panic selling, even when they know the underlying business of the company is fine.

The end result for the company is stock prices driven toward zero and bankruptcy or government takeover. The criminal liabilities imposed under Sarbanes-Oxley have driven accountants to stricter and stricter accounting evaluations and interpretations and have prevented leading executives from resisting them.

The Problems with Mark-to-Market Accounting: William Isaac, chairman of the FDIC in the 1980s under President Reagan, recently wrote in The Wall Street Journal, "During the 1980s, our underlying economic problems were far more serious than the economic problems we're facing this time around. ... It could have been much worse. The country's 10 largest banks were loaded up with Third World debt that was valued in the markets at cents on the dollar. If we had marked those loans to market prices, virtually every one of them would have been insolvent."

Isaac continues, "But what do we do when the already thin market for those assets freezes up, and only a handful of transactions occur at extremely depressed prices? ... The accounting profession, scarred by decades of costly litigation, just keeps marking down the assets as fast as it can."

He concludes, "This is contrary to everything we know about bank regulation. When there are temporary impairments of asset values, due to economic and marketplace events, regulators must give institutions an opportunity to survive the temporary impairment. Assets should not be marked to unrealistic fire sale prices. Regulators must evaluate the assets on the basis of their true economic value (a discounted cash flow analysis). If we had followed today's approach during the 1980s, we would have nationalized all of the major banks in the country, and thousands of additional banks and thrifts would have failed. I have little doubt that the country would have gone from a serious recession into a depression."

Similarly, University of Chicago Law Professor Richard Epstein, among the best in the country at law and economics analysis, recently wrote about mark-to-market accounting for today's mortgage-related securities, "Unfortunately, there is no working market to mark this paper down to. To meet their bond covenants and their capital requirements, these firms have to sell their paper at distress prices that don't reflect the upbeat fact that the anticipated income streams from this paper might well keep the firm afloat."

Alex Pollock, former head of the Federal Home Loan Bank of Chicago, explains that when the economy is in the midst of a severe downturn, the use of mark-to-market accounting "reinforces the downward cycle of panic-falling prices-losses-illiquidity-credit contraction-more panic-further falling prices-greater reported losses-no active markets. Fair value accounting adds momentum to a destructive downside overshoot."

Reform or Bust: Because existing rules requiring mark-to-market accounting are causing such turmoil on Wall Street, mark-to-market accounting should be suspended immediately so as to relieve the stress on banks and corporations. In the interim, we can use the economic value approach based on a discounted cash flow analysis of anticipated-income streams, as we did for decades before the new mark-to-market began to take hold. We can take the time to evaluate mark-to-market all over again. Perhaps a three-year rolling average to determine mark-to-market prices would be a workable permanent system.

It is not widely understood that the adoption of mark-to-market accounting rules is a major factor in the liquidity crisis which is leading companies to go bankrupt. But it is destructive to have artificial accounting rules ruin companies that would have otherwise survived under previous rules.

For companies like Bear Stearns, Lehman Brothers and American International Group, suspending mark-to-market rules will come too late. But for the remaining vulnerable banks and corporations, doing away with the current mark-to-market accounting rules will safeguard against destructive pricing volatility, needless bankruptcies, job loss and huge taxpayer bailouts.

Suspending Mark-to-Market Only the First Step to Economic Recovery: In the wake of today's vote, suspending mark-to-market is an extremely important first step to take, but it is only a first step.

Congress should also consider a bold and dramatic program to restart economic growth and rebuild market efforts.

In particular, the Congress should look at the impact of the Irish 12% corporate income tax on attracting investment and jobs to Ireland and consider a dramatic cut in the U.S. corporate income tax (the highest in the world when combined with state taxes) as a step toward attracting high-value productive and desirable jobs back to the United States.

The Congress should look at the Chinese and Singapore growth patterns and match them by zeroing out the capital gains tax to induce massive flows of private capital to rebuild the market and minimize the need for a taxpayer-funded bailout.

The Congress should repeal Sarbanes-Oxley, which failed to warn of every single bankruptcy but provides a $3-million-a-year accounting and regulatory expense for every small company wishing to go public.

This is the kind of pro-growth, pro-entrepreneur program that would accelerate the American recovery and lead to the next economic period of real growth.

Former House Speaker Newt Gingrich is a senior fellow at the American Enterprise Institute (AEI). Emily Renwick is a research assistant at AEI and also contributed to this op-ed.

[Daniel]

Um...

Why shouldn't securities be listed at their present market value?

Ever hear of the term Moral hazard? (Of course you do, you throw it around like candy). There is a reason that banks are required to do so.

[crb]

If we had mark to market accounting during previous troubling times we may not have ever gotten out of them. Pretend you have a house, and you want to sell that house, but no one wants to buy it? Does that mean it is worth $0?

It isn't as if devaluing an asset on a balance sheet has no repercussions elsewhere for a bank.

I wouldn't expect you to understand economic issues like this though, I grant you a pass.

(and ps, you're not using the term moral hazard correctly).

[Daniel]

If we had mark to market accounting during previous troubling times we may not have ever gotten out of them. Pretend you have a house, and you want to sell that house, but no one wants to buy it? Does that mean it is worth $0?

It isn't as if devaluing an asset on a balance sheet has no repercussions elsewhere for a bank.

I wouldn't expect you to understand economic issues like this though, I grant you a pass.

(and ps, you're not using the term moral hazard correctly).

Yea. Actually it does. That's called the market valuing a product.

and no. I'm not using moral hazard incorrectly:


Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions.

By allowing institutions to value things at a price that is not commiserate with their market value, you allow them to worry less about the volatility of the market, and thus allowing them to ignore the risk associated with holding volatile securities.


Then again. I don't expect you to be able to understand these basic market principles.

[Jorddyn]

Perhaps a three-year rolling average to determine mark-to-market prices would be a workable permanent system.

That's just silly. It's false stabilization of the prices and in no way representative of what's happening right now.

Think of it this way - if I ran a mutual fund that consisted entirely of Bear Stearns and Lehman Brothers, the current price that people could buy in at and I'd have to pay out at would be made up of their prices over the last three years. Anyone who owned would be a fool to not sell. And how exactly would I pay them back, considering I'd have to sell my shares of the now worthless Bear Stearns and Lehman Bros to generate cash?

[Jorddyn]

P.S. There's no reason that those who made billions - whether playing in the market or subprime lending - shouldn't also run the risk of losing billions thanks to their business practicies.

[Jorddyn]

Pretend you have a house, and you want to sell that house, but no one wants to buy it? Does that mean it is worth $0?

If it's on the market for $1, it certainly does.

[Keller]

Why wont PE firms buy these assets, crb?

[crb]

No, Daniel, I'm afraid you don't understand.

It doesn't allow them to ignore the risk, because it is still an asset they hold, that they will need to sell one day.

Us private citizens do not need to do this type of accounting. Would you say people are insulated against the risk of their investments in the stock market? We don't have to show a loss or gain until the security is sold.

What if as a private citizen your credit worthiness was tied to your assets value on paper, and what if you could lose your home mortgage if your asset value dropped below a certain amount. What if a temporarily drop in stock market prices caused the value of your 401k to dip which caused your credit worthiness to falter and caused you to lose your home. It doesn't matter if the dip was only for though a week, a month, a quarter, or a year, which is a small period of time for a 30 year mortgage. What matters is for that brief dip you did not have enough capital to maintain your credit worthiness so you got kicked out on the street.

Would that be a good system? No, it wouldn't, and it isn't a good system for companies either.

It makes temporary market swings result in premanent negative repercussions. It creates unstoppable downward spirals that result in bank failures, bankruptcies, lost jobs, lost capital, and all sorts of bad shit.

If you really think this is a moral hazard issue (which it so obviously isn't) why is it then that banks have taken on more risky loans since the accounting rules were changed? If it was a moral hazard issue surely risk would have decreased?

[Keller]

No, Daniel, I'm afraid you don't understand.

It doesn't allow them to ignore the risk, because it is still an asset they hold, that they will need to sell one day.

Us private citizens do not need to do this type of accounting. Would you say people are insulated against the risk of their investments in the stock market? We don't have to show a loss or gain until the security is sold.

What if as a private citizen your credit worthiness was tied to your assets value on paper, and what if you could lose your home mortgage if your asset value dropped below a certain amount. What if a temporarily drop in stock market prices caused the value of your 401k to dip which caused your credit worthiness to falter and caused you to lose your home. It doesn't matter if the dip was only for though a week, a month, a quarter, or a year, which is a small period of time for a 30 year mortgage. What matters is for that brief dip you did not have enough capital to maintain your credit worthiness so you got kicked out on the street.

Would that be a good system? No, it wouldn't, and it isn't a good system for companies either.

It makes temporary market swings result in premanent negative repercussions. It creates unstoppable downward spirals that result in bank failures, bankruptcies, lost jobs, lost capital, and all sorts of bad shit.

If you really think this is a moral hazard issue (which it so obviously isn't) why is it then that banks have taken on more risky loans since the accounting rules were changed? If it was a moral hazard issue surely risk would have decreased?

Are you asking, "What if you leveraged all your assets to the brink of regulatory maximums and then some of your assets lost their value and you were PWNT?"

Sounds like you didn't watch your aggro, you got knocked into the whelp cave and you wiped the economy.

[crb]

Why wont PE firms buy these assets, crb?
risk and uncertainty, and quite frankly, lack of money. If you're attacked by a bear you don't need to be faster than the bear, just faster than the people you're with. With all the investment options out there, mortgage securities aren't the best choice right now. It doesn't mean they lack value, but if you have money to invest you go with the best investment (most of this year that has been oil).

The lack of buyers != lack of value.

A temporary down spike in values should not have such permanent repercussions.

The fact is stopping mark to market accounting rules would stabilize the downward spiral, prevent further bank failures and job losses. Those are good things.

[crb]

P.S. There's no reason that those who made billions - whether playing in the market or subprime lending - shouldn't also run the risk of losing billions thanks to their business practicies.
And this has nothing to do with that.

This has to do with balance sheet accounting and bank credit ratings. Not gains or losses or CEO pay or severance packages.

Oh, ya, and the other side of this mark to market accounting. Next year, or whenever housing recovers. Banks will have billion dollar write-ups when they revalue their mortgage assets. Maybe even a trillion.

So you're defending a system whereby

in a down year many banks go under because of certain assets they hold. Tax payers get put on the hook for billions and billions in bailouts. People lose their jobs, people lose tons of value in their retirement accounts, companies go bankrupt.

The next year, those same assets are written up back to normal values. The banks that survived get huge windfalls, their executives get massive bonuses. It doesn't replace tax payer money though (depending on type of bailout) it doesn't replace lost jobs from the banks who went under, and john q public who panic sold with his retirement account, or bet on the wrong bank, is screwed.

That, is a good system?

All mark to market accounting does is force balance sheets to follow the extremes of the market, which then become self reinforcing extremes. Moderate down swings and moderate up swings are far better than extreme spikes, far less permanent damage.

[Jorddyn]

So you're defending a system whereby in a down year many banks go under because of certain assets they hold.

They're not going under because of assets they hold. They're going under because they don't hold enough. They know that these assets are valued based on market, and they know the ratios they have to maintain to be in compliance, and the ratios they have to maintain to make people want to invest in and with them.

I'm defending a system in which companies with massive amounts of debt used to earn massive amounts of money on risky investments during the good years have to keep in mind the bad years.

I'm saying that if they risk it all they may lose it all - and it's up to them and their shareholders to determine if that's a good risk. I'm saying that the banks (and their shareholders) who survive massive downturns deserve their windfalls. They planned and prepared for the inevitable by maintaining sufficient assets with respect to their liabilities, and accepted lower returns during the boom to ensure the sustainability of their business in the downturn.

I'm saying playing the accounting game is not an appropriate way to fix the problem.

[Keller]

They're not going under because of assets they hold. They're going under because they don't hold enough. They know that these assets are valued based on market, and they know the ratios they have to maintain to be in compliance, and the ratios they have to maintain to make people want to invest in and with them.

I'm defending a system in which companies with massive amounts of debt used to earn massive amounts of money on risky investments during the good years have to keep in mind the bad years.

I'm saying that if they risk it all they may lose it all - and it's up to them and their shareholders to determine if that's a good risk. I'm saying that the banks (and their shareholders) who survive massive downturns deserve their windfalls. They planned and prepared for the inevitable by maintaining sufficient assets with respect to their liabilities, and accepted lower returns during the boom to ensure the sustainability of their business in the downturn.

I'm saying playing the accounting game is not an appropriate way to fix the problem.

I liked my explanation better:


Are you asking, "What if you leveraged all your assets to the brink of regulatory maximums and then some of your assets lost their value and you were PWNT?"

Sounds like you didn't watch your aggro, you got knocked into the whelp cave and you wiped the economy.

[crb]

I'm saying playing the accounting game is not an appropriate way to fix the problem.

Really Jorddyn... then why was the accounting game played to create mark to market accounting?

And, if this is such a great system, why don't others have to do it? Like regular people?

Abolishing this rule doesn't mean banks who make bad bets wouldn't feel pain, it just means that they would not have to feel pain until they sell their assets, rather than constantly in a self reinforcing downward spiral.

And even good banks have been hurt, you don't seem to realize this.

See, there is a bad bank, with way too much leverage and risky securities. They have to mark down their securities, which makes them illiquid and they go under. Which means their assets are forced to be liquiditated at firesale prices (all assets, good, bad inbetween). Which means the "market" price of these (all assets) assets are now the price at which they sold under duress because of the affortmentioned failure. So now all the other banks have to value their securities (good and bad) at this under-duress firesale price, and maybe that pushes one of them over. So then it's securities are liquidated at even worse under-duress firesale prices. So then all the banks left have to revalue based on these new prices, and maybe that pushes 2 more of them over. Rinse repeat. Each round getting lower and lower, caused by the round before it.

If you know any programming consider this

$x = 10
while($x < 10){
$x=$x-1;
}

When does it stop?

Calling it a self perpetuating downward spiral isn't rhetoric, it is the truth.

Now, the solution is for the tax payer to put forth 700 billion as a backstop, and why would that work? Because mark to market accounting and equity::debt ratios do not apply to the federal government.

A good system? I think not.

[ClydeR]

Suspending the mark-to-market rule is like burying your head in the sand (which ostriches don't really do). The mark-to-market rule requires that securities values be reported on financial statements at their actual value. Without M2M, the financial statements used by investors and lenders would be less valuable, because investments would be reported on financial statements at their cost, even if the value of the investment had declined significantly.

I think everybody agrees that financial statements should be as useful as possible. The issue with M2M is how you value assets. Current rules use the market to value assets for M2M purposes. The price at which securities trade in the market is the value that's used on the financial statement. Some people believe that M2M should not use market value because mortgage backed securities are "illiquid." I have to wonder if illiquid is becoming a synonym for worthless.

I see three options for M2M. First, suspend it, but that would make financial statements less useful, even misleading. Second, keep it like it is, using actual market values. Third, adopt a new measure of value for illiquid assets that is higher than the price at which those assets would sell.

[Jorddyn]

Really Jorddyn... then why was the accounting game played to create mark to market accounting?

It wasn't a game. It's done that way because there has to be some sort of way to account for such things. This methodology has worked fine for how long? And it's only now being called into question because the market is overvalued. Let it reset, and don't slow down recovery with a three year average.


And, if this is such a great system, why don't others have to do it? Like regular people?

Regular people do abide by it. When you go to take out a mortgage or line of credit, they can request a current bank statement, current investment statements, appraisal of your house (if a refi). They don't ask or care about the purchase price, three year average price, or really anything but the current price of the stocks in your portfolio.


And even good banks have been hurt, you don't seem to realize this.

My family owns a car dealership. They've been hurt by this market. Yes, I get that it has impacts beyond just the banks that over-leveraged themselves.


Which means the "market" price of these (all assets) assets are now the price at which they sold under duress because of the affortmentioned failure.

If that's the appropriate price, then that should be the market. If the price is too low, someone with appropriate capital will offer a higher price. Now, I do agree with you that there will be a secondary and possibly even tertiary "round of pain", but I do not believe they will be nearly as large or as bad as the first round, as each time it happens you're much closer to what the true market of those securities should be.


Now, the solution is for the tax payer to put forth 700 billion as a backstop, and why would that work? Because mark to market accounting and equity::debt ratios do not apply to the federal government.

That will work because the government is essentially purchasing the worst of the securities, thus saving the behinds of those who currently hold them. One can hope, I suppose, that saving these companies lessens the recession and as such the rate of payment on these securities is somewhat higher than expected, allowing the taxpayers to recoup a significant amount of the bailout money. I'm not saying good or bad - I'm just saying is.

As an aside - how exactly would you mark to market the Federal government, and why would you need to?

[Kranar]

If we had mark to market accounting during previous troubling times we may not have ever gotten out of them. Pretend you have a house, and you want to sell that house, but no one wants to buy it? Does that mean it is worth $0?


Umm... the answer is yes. If no one wants to buy a house, absolutely no one, then it is worth $0. But guess what, if you found a house regardless of how crappy it is, I'm sure you can find someone willing to buy it for 1 dollar, heck, I'd buy it for 1 dollar and I've never even seen it before. And then someone else might inch in there and place a bid of oh... 2 dollars. And then someone else might think "Well jeez... if that house really is going to sell for 2 bucks, I'll throw in my bid for 3 bucks" etc etc... and what do you know... you get a market, just like what happens on the stock market.

A rolling average is just absolutely hilarious by the way. In many cases the current price of a stock already takes into account a rolling average implicitely. Making it explicit is a complete catastrophy, you're compounding a rolling average with a rolling average. So if a company today announces bankruptcy but last month it was worth billions... oh you know, the company is still worth something, just take the average of its CURRENT price which is 0, and it's price from last month and you're good to go.

So that's why making a price valuation based on the past does not work, now as for the future...

Very VERY few people are competent enough to know what the value of any security will be a year from now because if they did know and say they thought it would be worth 10 bucks when currently it's worth only 9, that would represent an arb opportunity and anyone with half a brain would jump on it, buying the security up to $9.99 just to make even a 1 penny profit, and then guess what? The price people think the security is worth a year from now ends up being what the security is currently worth at this moment. Now while granted some competent people can do it, like Warren Buffett, I certainly wouldn't want to trust the majority of large institutions who have an interest in inflating the price of their assets to predict the future.

The fact of the matter is that the current market price of a security is the most representative/correct price at any given moment in time.

[crb]

Regular people do abide by it. When you go to take out a mortgage or line of credit, they can request a current bank statement, current investment statements, appraisal of your house (if a refi). They don't ask or care about the purchase price, three year average price, or really anything but the current price of the stocks in your portfolio.

No, they don't. Your credit history is not affected by monthly revaluations of your home value.



If that's the appropriate price, then that should be the market. If the price is too low, someone with appropriate capital will offer a higher price. Now, I do agree with you that there will be a secondary and possibly even tertiary "round of pain", but I do not believe they will be nearly as large or as bad as the first round, as each time it happens you're much closer to what the true market of those securities should be.

You're wrong on both.

Firstly, you assume there are always buyers who have nothing better to do with their money. This is not the case.

Secondly, each successful round gets worse because the good assets start getting sold at firesale prices when banks go under as well. When a bank goes under, it isn't just their subprime securities that go at firesale prices, everything is on sale. Causing even good assets to get marked down with this accounting rule.

It is the very definition of a snowball, and like a Terminator it will not stop until somoene with a massive pocketbook picks up the slack. IE the government, or possibly a very large commercial bank. Suppose BOA bought up all other banks and had enough deposits to absorb writing down everything from everyone. That could stop it too - but that is speculative and ending up with 1 bank for the entire country wouldn't be a good thing.



That will work because the government is essentially purchasing the worst of the securities, thus saving the behinds of those who currently hold them. One can hope, I suppose, that saving these companies lessens the recession and as such the rate of payment on these securities is somewhat higher than expected, allowing the taxpayers to recoup a significant amount of the bailout money. I'm not saying good or bad - I'm just saying is.


Which is why they're doing it. I'm not arguing against the bailout here. But the reason the bailout is necessary in the first place is because of this accounting rule.



As an aside - how exactly would you mark to market the Federal government, and why would you need to?

I wouldn't, and that is why the government has the ability to backstop this. The fact that you require an entity that doesn't use this accounting to stop the process should point out to you that mark to market is a bad idea.

[Clove]

That's just silly. It's false stabilization of the prices and in no way representative of what's happening right now.

Think of it this way - if I ran a mutual fund that consisted entirely of Bear Stearns and Lehman Brothers, the current price that people could buy in at and I'd have to pay out at would be made up of their prices over the last three years. Anyone who owned would be a fool to not sell. And how exactly would I pay them back, considering I'd have to sell my shares of the now worthless Bear Stearns and Lehman Bros to generate cash?


P.S. There's no reason that those who made billions - whether playing in the market or subprime lending - shouldn't also run the risk of losing billions thanks to their business practicies.QFT. Thanks Jorddyn, I'm too tired and busy to address this nonsense.

[Jorddyn]

No, they don't. Your credit history is not affected by monthly revaluations of your home value.

I don't have massive rotating debt based on the value of my holdings, either. But when I do take out debt, the banks do look at the market value of what I own.


Firstly, you assume there are always buyers who have nothing better to do with their money. This is not the case.

If it's a bargain, there will be.


Secondly, each successful round gets worse because the good assets start getting sold at firesale prices when banks go under as well. When a bank goes under, it isn't just their subprime securities that go at firesale prices, everything is on sale. Causing even good assets to get marked down with this accounting rule.

The markets will bounce right back up if they're undervalued because no one will sell at the extremely undervalued price. If they don't bounce, and people are happy to both buy and sell at the new price, then you have a new and correct market which should be used for valuation.



It is the very definition of a snowball, and like a Terminator it will not stop until somoene with a massive pocketbook picks up the slack. IE the government, or possibly a very large commercial bank. Suppose BOA bought up all other banks and had enough deposits to absorb writing down everything from everyone. That could stop it too - but that is speculative and ending up with 1 bank for the entire country wouldn't be a good thing.

Securities will stop falling as soon as they (individually) are appropriately market priced based on their riskiness and potential future value. There's always someone looking to pick up a bargain. Now, can I buy all of the assets of WaMu? Of course not. But if WaMu owned 1,000,000 shares of Microsoft, and when it failed that somehow made the market of Microsoft 1/2 of what it was the day before? You can bet I'd find a few bucks to invest, as would a bunch of other people, and the market would be right back to where it started. It's the aggregate that's important.

Do I want to buy their bundles of mortgages? Not unless it's hugely discounted - and that huge discount is what determines the new market, and is an appropriate valuation.


The fact that you require an entity that doesn't use this accounting to stop the process should point out to you that mark to market is a bad idea.

The reason the government is expected to stop this has nothing to do with the accounting it uses. It's because it's the government.

[Daniel]

I love how the supposed "Libertarian" is trying to tell people that assessing value on the market is bad for the economy.

[Clove]

I love how the supposed "Libertarian" is trying to tell people that assessing value on the market is bad for the economy.Yeah, that kind of irony is epic.

[Clove]

Securities will stop falling as soon as they (individually) are appropriately market priced based on their riskiness and potential future value. There's always someone looking to pick up a bargain. Now, can I buy all of the assets of WaMu? Of course not. But if WaMu owned 1,000,000 shares of Microsoft, and when it failed that somehow made the market of Microsoft 1/2 of what it was the day before? You can bet I'd find a few bucks to invest, as would a bunch of other people, and the market would be right back to where it started. It's the aggregate that's important.You, me and Warren Buffet!

[Clove]

You know the real problem is the fiat currency and central banks...

[crb]

My interest has been down thanks to the craptastic company that is comcast, but guess what? Looks like the congress agrees with me, the new version of the bailout addresses M2M accounting. Winner!

[Clove]

My interest has been down thanks to the craptastic company that is comcast, but guess what? Looks like the congress agrees with me, the new version of the bailout addresses M2M accounting. Winner!Congress never makes stupid calls (at least not when they agree with crb). If they had consulted crb years ago we wouldn't even be having this problem right now. In fact, all the pork that's in the new bailout bill are also good ideas! I'm shocked that we've waited so long to allocate 50 million to study the effects of Idaho potatoes on greenhouse gasses....

[ClydeR]

My interest has been down thanks to the craptastic company that is comcast, but guess what? Looks like the congress agrees with me, the new version of the bailout addresses M2M accounting. Winner!

Thanks for the heads up. I found the relevant section of the Senate-passed bill.


SEC. 132. AUTHORITY TO SUSPEND MARK-TO-MARKET ACCOUNTING.


(a) Authority- The Securities and Exchange Commission shall have the authority under the securities laws (as such term is defined in section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47)) to suspend, by rule, regulation, or order, the application of Statement Number 157 of the Financial Accounting Standards Board for any issuer (as such term is defined in section 3(a)(8) of such Act) or with respect to any class or category of transaction if the Commission determines that is necessary or appropriate in the public interest and is consistent with the protection of investors.

(b) Savings Provision- Nothing in subsection (a) shall be construed to restrict or limit any authority of the Securities and Exchange Commission under securities laws as in effect on the date of enactment of this Act.

I'm pretty sure that the bill does not change the law in any way with regard to M2M. The SEC had the authority to suspend M2M before, and the SEC will still have that authority after passage of the bill. The bill does not mandate suspension of M2M. However, it is a strong signal to the SEC that Congress would like to have M2M suspended.

A suspension or loosening (http://www.washingtonpost.com/wp-dyn/content/article/2008/09/30/AR2008093002298.html) of, or promise to suspend or loosen, M2M by the SEC will increase the probability of passage of the bill in the House. That's what the SEC appears to be doing.

[crb]

Welp, they suspended M2M and the stock markets broadly rallied on the news. Additionally, when banks report their next earnings, people expect more rallies.

Of course, doing this at the bottom, does not avoid any of the damage, had they been smarter, they would have done this in 2007 when the trouble first erupted, or at the latest, summer of 2008. Talk about being behind the curve.

[Keller]

Welp, they suspended M2M and the stock markets broadly rallied on the news. Additionally, when banks report their next earnings, people expect more rallies.

Of course, doing this at the bottom, does not avoid any of the damage, had they been smarter, they would have done this in 2007 when the trouble first erupted, or at the latest, summer of 2008. Talk about being behind the curve.

"People expect rallies"?

Did those same people expect AIG to quickly rebound?

[Kranar]

Did those same people expect AIG to quickly rebound?


crb expected AIG to rebound in 18 months back in September.

And that was back when it was at $2.50.

11 months to go I guess...

If A happens, and B also happens at roughly the same time... then it must be that A caused B.

Look at this rally soar...

[Keller]

crb expected AIG to rebound in 18 months back in September.

And that was back when it was at $2.50.

11 months to go I guess...

Look at this rally soar...

That was my joke. crb thinks the markets will rally with the assets are marked up on the balance sheet. But instead of saying, "I think" he said, "People think".

[longshot]

Smart things.



http://dealbreaker.com/m2m.jpg

Lack of transparency will simply result in a discount in share price (GE anyone?). The suspension of these rules, and the timing of the decision, just pumps even more uncertainty into a system that desperately needs stability.

There is no way that any individual or firm can pretend to make an informed investment or consumption decision if the rules are going to change every 15 minutes. We're moving to a system of government selected winners and losers.

[Keller]

Lack of transparency will simply result in a discount in share price (GE anyone?). The suspension of these rules, and the timing of the decision, just pumps even more uncertainty into a system that desperately needs stability.

There is no way that any individual or firm can pretend to make an informed investment or consumption decision if the rules are going to change every 15 minutes. We're moving to a system of government selected winners and losers.

But it was UNFAIR what the market was doing to those TOXIC assets!!!!!11111

$20 said he read a couple articles on cnbc.com and decided that was what had to be done to end this recession now.

[crb]

You people are idiots.

You think cannot trace economic or stock market moves to events? I'm not the type to accuse someone of lying so baldly, but man. I think Kranar must be lying about his job, experience, and income. I can't see how he could honestly think that information does not move markets. Weekly you can see economic data reported and see a direct correlation in the market the instant it happens. Individual stocks are often HALTED FOR TRADING based on pending important news releases. Obviously, if information was important, they wouldn't do that, would they? How can you be so retarded to think otherwise?

Or is it your panties get such in a bunch trying to dispute things I say that you'll say anything? Its like if I said the sky was blue you'd insist I was merely selectively colorblind and it is really purple. Give it a rest.

And yes, "people expect rallies" by people I mean bank executives, economists, investors, money managers, etc.

I don't think you guys even understand what mark to market accounting is. You keep bitching about transparency but transparency has pretty much nothing to do with it. Nothing at all. Transparency is knowing what a publicly traded company has, not what those assets are worth.

Look at the upside of it. Suppose you own 10 billion dollars in some derivative. Suppose there is a sale of 10 million dollars of that derivate type at double the value, 20 million. Did your portfolio just double in value? Do you know have 20 billion in assets to back up loans you make or whatever else? Mark to market says yes. The problem is, 10 million is diddly compared to 10 billion, and if you were actually to sell your 10 billion portfolio you would move the market through the volume you are creating to lower prices. Thus, the 20 billion dollar value is fictitious and should not be used to justify capital ratios.

Thats the upside problem. The downside problem is the opposite. On the upside when there is no asset for the market (demand exceeds supply) values go up to fictitious levels. On the downside when there is no market for the asset, values go down to fictitious levels. When markets are illiquid or products are scarce, mark to market accounting results in upwards or downward spirals which result in boom/bust cycles, volatitility, extreme results, and generally shitty situations like we have now. Kranar might hate it, because, assuming he isn't lying which is the most likely scenario, his business relies on volatility, and this should lessen it. But that doesn't mean its bad for the economy, just for him.

All the smart people in washington and on wall street say so, the FASB agrees, but hey, because CRB said it on the PC Forums, it must be wrong! You guys are a joke. Read a book.

The only downside of this move is the timing. If we're at the bottom then the banks will not get the huge write-ups from asset prices recovering, they're way too late. But, regardless, it was important we move away from this stupid accounting system so that we don't get right back here in another cycle.

The bottom line with M2M is that it assumed that the last sale price of an asset is the price all such assets would get if they were sold right then. Like the observer effect, that cannot be true, because if all those assets were sold, the market would be entirely different. Thats why the values are fictitious.

If an investor wants to know the value of an asset a company holds, they can do their homework and figure it out, they can rely on company estimates, whatever. M2M has nothing to do with that process.

At issue is regulatory oversight requiring banks to maintain certain capital ratios and how M2M accounting directly influences those ratios through self-reinforcing upward and downward spirals based on fictitious values.

You can suspend M2M, or you can disengage it from the capital ratio requirements. But it needed to be done.

Now, if any of you have an intelligent response about how myself, Steve Forbes, Ben Bernanke, all those people in Washington, the FASB, most economists, people on Wall Street, are wrong. Have at it.

If you're just going to giggle, attempt to make fun of me, and generally act like 13 year old boys who snuck into the theater to see their first tit, you might as well not bother. I just like pointing out how I was ahead of the curve on this.

[Jorddyn]

M2M wasn't suspended, nor was it removed from capital ratio requirements.

Basically, the rules now allow banks to use more judgement in the value of their impaired assests if they can prove that they have the ability to and more than likely will hold the asset to maturity, and allows them to more easily separate impaired from non-impaired assets.

It's not perfect. It's a hell of a lot better than getting rid of it or a three year rolling average.

[Keller]

Let me get this right, you are saying that when the market prices an asset, that price is not the true value?

What the fuck is the point of a market?

[crb]

M2M wasn't suspended, nor was it removed from capital ratio requirements.

Basically, the rules now allow banks to use more judgement in the value of their impaired assests if they can prove that they have the ability to and more than likely will hold the asset to maturity, and allows them to more easily separate impaired from non-impaired assets.

It's not perfect. It's a hell of a lot better than getting rid of it or a three year rolling average.
So in other words, it WAS suspended and removed from capital ratio requirements.

What you said is equivalent too.

"No no, they didn't cook the pizza. They merely placed it in a hot oven until it reached a tasty temperature and the cheese was melted."

[crb]

Let me get this right, you are saying that when the market prices an asset, that price is not the true value?

What the fuck is the point of a market?
I'm saying it is wrong to assume that all such assets on the globe would be sold for that value if sold immediately after that sale was finalized.

This is a good analogy:

http://en.wikipedia.org/wiki/Observer_effect_(physics)

Or here... often towards the end of a trading day, especially at the end of a month or quarter, money managers will manipulate stock share prices so that the "last value" of the day is higher (or lower if they're short) than word otherwise be the case. You can have a 100 million share volume day in a stock, and a single 100 share block as the last trade of the day could indicate a higher close.

Is that a true value of all the stock, in the sense that everyone who owned such stock could sell on the next trading day and get that price? Or is it fiction, generated so people can show higher than actual gains, on paper, and appease clients or shareholders? Hmm? If there are 1 billion shares outstanding, is a 100 share block enough to put the value on all of those?

If it is fiction, should such a system to be used to figure out capital ratio requirements for our largest financial institutions? A situation whereby firesale prices could lead to a downward spiral resulting in massive writedowns, requiring huge capital raises, resulting in bankruptcies, credit evaporating, business failures, unemployement, and recession?

Or maybe... we do something else?

[Keller]

That's like saying:

Individual borrowed $100 from Bank for a mortgage on House with FMV of $120.

Individual purchased House for $120 in 2005.

In 2009, Individual has paid down $40 of the principal on the note from Bank. The FMV of House, however, has reduced to $50.

So Individual has:

House with FMV: $50 and a note with adjusted issue price of $60.

Do you think the same Bank who wants to maintin historic cost values and not M2M on their own assets would do the same for Individual? Or do you think that if Individual came to pull out "equity" against the historic cost of House, Bank would giggle like a 13 year old boy who snuck into a theatre to see his first tit?

[crb]

Your analogy has a flaw.

In that situation, if M2M applied to the individual, he'd lose the house, regardless of his employment status or ability to pay the loan.

Having him go get a new loan breaks your analogy.

M2M accounting killed Lehman Brothers (and would have many other banks if not for bailouts). They were making money, were not insolvent, and had positive cash flow. They could have stayed operating as a business indefinitely, holding all assets to maturity. But regulatory capital ratios and M2M accounting caused them to need to raise a ton of money quickly or lose their house, and guess what, they lost their house.

Imagine there was a regulation or law saying that homeowners could not go below 20% equity in their home. If they did, they had 30 days to pay the bank to get back to 20% or they'd be evicted. Then imagine home values were recalculated constantly.

What? Your neighbor loses his job and needs to move to a new state to get work? Since he needs to sell his house quick he accepts a lowball offer? Guess what, your house value just went down too based on that market sale, and if you don't pay the bank to make up the difference (your regulatory "equity" requirement) you gotta find an apartment. I don't care if your mortgage payment is only 5% your monthly income, and if you want to live in the house for 30 years, you're out on your butt.

Good system?

[Keller]

My analogy was showing that assets should be valued at their FMV, not historic cost.

If, in my analogy, the Individual had a series of complicated and intertwined creditors and a vast network of equity investors, I would also expect that Individual would have regulations providing for threshold capital requirements and I would lose no sleep if individual consistently pushed the envelope with his capital requirements and got burned when he overvalued assets and purchased at a price far above their actual FMV.

Sorry, you'll never convince me that you should value assets at anything other than FMV, ESPECIALLY when you're dealing in a complex market where average joes rely on those asset values to make prudent investments.

[crb]

My analogy was showing that assets should be valued at their FMV, not historic cost.

If, in my analogy, the Individual had a series of complicated and intertwined creditors and a vast network of equity investors, I would also expect that Individual would have regulations providing for threshold capital requirements and I would lose no sleep if individual consistently pushed the envelope with his capital requirements and got burned when he overvalued assets and purchased at a price far above their actual FMV.

Sorry, you'll never convince me that you should value assets at anything other than FMV, ESPECIALLY when you're dealing in a complex market where average joes rely on those asset values to make prudent investments.
So, how do you feel about the upside of M2M then Keller? The other extreme? Because it'd seem based on what you just said you've not thought about it.

What happens when artificially high prices push book values to artificially high levels which makes it seem, on paper, that a bank has oodles of excess capital?

The bank should be smart enough to realize that those values are fictitious and ignore them?

Isn't that kind of hypocritical? Considering how the bank does not have the option to ignore the extreme result of M2M on the bottom end thanks to regulatory requirements.

Do you even realize that it is M2M accounting that fueled the speculation on the upswing? When you assume assets have a high value based on artificially inflated prices you balance your books with far less reserve capital. Just like how now when you assume assets have a low value based on artificially deflated prices you need a ton of capital to balance your books.

[Keller]

I think that if an asset sells between a willing buyer and a willing seller, neither being coerced or deceived, then the price that the asset sells for is the FMV of that asset.

If markets are capable of creating artificially high prices, then those markets are flawed either because there is not a willing buyer, a willing seller, or either is being somehow coerced or deceived.

Was it M2M accounting that fueled the speculation? Please explain that bit.

[crb]

M2M doesn't only apply when things are going down.

It applies to things going up, it creates spirals. Ben Bernanke and others have talked alot about this.

Suppose there is unnatural demand for a product (probably due to government interventionism). The demand increases values. These values then get written up on the books of the companies that hold them. The higher the asset value on their books, the less regulatory capital banks need to hold. Ergo they have more money to lend, so they can perhaps give more loans, buy more mortgage securities, etc. This increases demand more, which increases value more, which allows banks to lend more, which increases demand more, which increases value more, etc etc.

And then it breaks.

The values are of course fictitious because there is no way all those assets could be sold for the artificially high values, the very act of selling would increase the supply and ergo lower the price, and if everyone sold the supply would increase so much that prices would tumble.

In the end, M2M accounting creates volatility and amplifies the extremes of the marketplace to deleterious degrees.

And the other thing keller, does your "willing seller" include a distressed or desperate seller?

[Daniel]

So, banks should have no responsibility in estimating the true value of their assets and making appropriate decisions?

Interesting.

[Keller]

And the other thing keller, does your "willing seller" include a distressed or desperate seller?


I anticipated that question; I don't know.

I'm sympathetic to your argument that the normal market price for debt is higher than the fair market price. But the fact is that right now, there is entirely too much debt in the system and that debt is trading at an enormous discount. That is the fair market. Not the normal market.

I spend at least 25 hrs a week working on debt workouts. Firms everywhere are buying back their own corporate bonds because they are trading at such a discount that it would be ludicrous not to. That's the fair market.

[Jorddyn]

So in other words, it WAS suspended and removed from capital ratio requirements.

What you said is equivalent too.

"No no, they didn't cook the pizza. They merely placed it in a hot oven until it reached a tasty temperature and the cheese was melted."

It is nothing at all like that.

It's more like they have 100 pizzas. 5 have been sitting out on the counter for a week. 10 were accidentally made with no sauce, and were tossed back in the same fridge as 15 other good pizzas. 70 pizzas have been properly maintained in a separate fridge.

The 5 that have been on the counter for a week, and the 70 properly maintained separately in a separate fridge are easy. Write off the 5, leave the 70 alone.

The changes to M2M now allow the accountants to do a few things with the other 25.

They can:
Declare they're going to sell all at a discount because they can't tell them apart
Declare they're going to throw them all away
Declare they can and will separate the 15 good from the 10 bad, and what they're going to do with the 10 bad

Previously, they would have had to write off/down all 25 even if they were going to keep and eventually sell the 15 good ones at full price.

It still doesn't mean they get to leave 10 pizzas in the freezer that aren't going to sell at full price and not have to account for that, which is what full suspension of M2M would mean.

This is still a horrible analogy, but at least I know what I'm doing for dinner tonight.

[crb]

So, banks should have no responsibility in estimating the true value of their assets and making appropriate decisions?

Interesting.
You're talking to a straw man, I'm over here.

[Daniel]

You're talking to a straw man, I'm over here.

Not really. If a company was fulfilling their responsibility to their share holders then they wouldn't leverage their assets on what they know to be inflated values.

Therefore, your concerns are unfounded.

[Clove]

Pretend you have a house, and you want to sell that house, but no one wants to buy it? Does that mean it is worth $0?No, it means it isn't worth whatever price you think it's worth. If you're trying to sell it for a penny and nobody will buy it; it's worth zero. Thems the facts son, like it or not.

[Clove]

M2M accounting killed Lehman Brothers (and would have many other banks if not for bailouts). They were making money, were not insolvent, and had positive cash flow. They could have stayed operating as a business indefinitely, holding all assets to maturity. But regulatory capital ratios and M2M accounting caused them to need to raise a ton of money quickly or lose their house, and guess what, they lost their house.Imagine that, a bank was heavily invested in an asset that experts (some of whom were on their payroll, or should have been for obvious reasons) knew was bubbling and when it burst their company went into crisis. They wanted to make a lot of money, but the bottom dropped out faster than they planned and it killed their company. Don't think the experience hasn't been a lesson for the market in general. Unfortunately we're also teaching the market that if they make high-risk choices and they're "too big to fail" we'll pay to cushion the fall for them.

There are many, many banks who for whatever reason didn't think it was a good decision to be so heavily invested in derivative mortgage instruments or a good decision to accept too many subprime loans; and guess what? They are still in business and DIDN'T require TARP funds.

[Clove]

No, they don't. Your credit history is not affected by monthly revaluations of your home value.Jordy's already explained this to you. If you were going to use your home as security for a loan its market value would be essential to determining how much you could borrow against it.

Your personal credit rating is used to determine how much risk you present to creditors, your credit worthiness NOT how much you can afford to borrow. When you actually apply for a loan your DTI and/or the market value of secured assets do most definitely come into play.

Commercial credit is more complicated than individual credit, particularly for public companies. Let's face it crb, nobody is going to buy shares in you and expect dividends on your performance throughout your life especially if you're going to spend your time ignorantly discussing finance and economics.

Unfortunately assets can (and do) lose value and you can't credit a company for more value than they could reasonably get for assets they hold. I remember a story one of my old professors told me about how he was asked to factor a large inventory of new 8-track tapes (in the late 1980's).

Professor: "Oh this is easy, it isn't worth anything there is no market for 8-track tapes"
Business: "But some people collect them..."
Professor: "Do you have information about dealers that deal with 8-track tapes?"
Business: "...."
Professor: "Okay so, this inventory is junk."

Way it goes crb. In terms of volatile, risky assets- businesses need to tread carefully and not over-invest in them; or face the risk that comes with it.

[Gan]

^^^ Well said.


*There is one curve I'll throw into the personal loan part.

Credit score also usually determines which loan program you qualify for, and thus inadvertently determines how much one can borrow against the asset you are using as security (in terms of borrowing over 80% or jumbo loans). That being said, you are correct in demonstrating that credit is used to determine risk as compared to LTV determining how much is borrowed.

[Bobmuhthol]

Fair value accounting sucks and so does the European Union for pushing it so much.

[Stanley Burrell]

Here's what I got out of this thread:


... is like burying your head in the sand (which ostriches don't really do).

http://www.life123blog.com/images/ostrich-head-in-sand.jpg

http://www.cartoonstock.com/newscartoons/cartoonists/jca/lowres/jcan15l.jpg

http://www.conservativesfightback.com/members/admin/assets/sand.gif

Do not crush my infantile notion of desert burrowing ostriches. Or I will sic Thelma on you:

http://growabrain.typepad.com/growabrain/images/ostrich_head.jpg

[Rocktar]

Here is the problem I have with Mark to Market accounting and where it really damages banks.

You have x dollars in reserve and it is an asset worth x dollars.

Now, you loan out those x dollars for someone to buy a house.

Since you made a loan and the cash value of the sale of the loan is less than face value, your asset that was worth x dollars is now worth y dollars. y<x so you end up making a loan and you lower the value of your assets at the same time.

So, if you have other weak assets, like mortgage securities, and you must maintain a certain level of assets, and you are somewhat close to the line, you don't want to loan out any more cash because it makes your assets go down. Now, banks are suposedly in the business of loaning money, then this goes on and now, because of SEC, FDIC and other banking rules, they must keep certain levels of assets so, the banks decide to not loan any more money. This is a HUGE part of why the credit crunch started and thus, how mark to market accounting is one of the root causes of our current recession.

No loans means no buying houses, cars, store inventory, construction materials and innumrable other things that the economy depends on. That is an instant brake on the economy and now, is a noose around it's throat AND an anchor to drag. This is why the government wanted to buy up all the so called "toxic" assets to clear up the balance sheets of the banks, so they could loan money again and not be breaking the rule AND not teetering on the edge of collapse. The problem comes in that banks are cautious as hell right now and still don't want to loan money because they want to be sure and survive. So, the economy continues to slide.

[Bobmuhthol]

I'm pretty sure it wasn't the reserve system that persuaded banks to stop loaning, since that same system was in place when banks decided that LOANS ARE AWESOME!!!

[Rocktar]

I am pretty sure that you didn't read didly over shit of what I wrote nor understood any of it. I simply distilled a bunch of articles and videos of the experts yapping about it over the past 6 months.

[Bobmuhthol]

<<So, if you have other weak assets, like mortgage securities, and you must maintain a certain level of assets, and you are somewhat close to the line, you don't want to loan out any more cash because it makes your assets go down.>>

This never happened. Especially not because of the reserve system -- you know, the only thing stopping banks from giving loans equal to 100% of their assets.

[Rocktar]

Sure Bob, and all the experts saying it has over the past 6 months on MSNBC, NBC, CBS, ABC, Fox and Cable all are full of shit and you know better. What is your first name Bob, Neil, or is that just what you do?

STFU

[Tsa`ah]

Sure Bob, and all the experts saying it has over the past 6 months on MSNBC, NBC, CBS, ABC, Fox and Cable all are full of shit and you know better. What is your first name Bob, Neil, or is that just what you do?

STFU

Look at what the experts were saying before the crash ... nuff said.

When it comes to the economy, talking heads are a dime a dozen with their opinions being worth as much.

[Bobmuhthol]

What experts have been saying that banks are getting fucked over by the reserve system?

[Clove]

When it comes to the economy, talking heads are a dime a dozen with their opinions being worth as much.QFT.

[Keller]

I am pretty sure that you didn't read didly over shit of what I wrote nor understood any of it. I simply distilled a bunch of articles and videos of the experts yapping about it over the past 6 months.

I find it surprizing that you took the time to actually read something and didn't just pretend to have read it and pass off your musings and opinions as facts.

[Ignot]

I find it surprizing that you took the time to actually read something and didn't just pretend to have read it and pass off your musings and opinions as facts.

Not to be a grammar policeman but I believe it's spelled suprizing

[Keller]

Not to be a grammar policeman but I believe it's spelled suprizing

You're right, it is spelled suprizing, my bad, I was wrong.