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Minyan Peter - as always cutting down to the heart of financial firm issues:
http://www.minyanville.com/articles/.../index/a/21961
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Sapiens has expounded at length on the issue of usury.
The change in mark to market, the conversion of the worst 2 or 3 tranches of toxic assets to taxpayer balance sheets, the Fed outright buying on Treasuries, all are moves aimed to postpone the final reckoning.
But the fundamental problems still apply:
Jobs are still being lost.
Savings are still being depleted.
Interest on negative equity is still required to be paid.
Each day that goes by (and apparently each week with its 'going postal' event) is another nail in the coffin of untold numbers of American households.
Once this bottom is hit - that household is dead to the economy for many years, neither able to spend nor borrow.
At what point will a threshold be reached where critical mass is achieved for a true full bore Great Depression II irrespective of how 'healthy' banks are?
http://www.minyanville.com/articles/.../index/a/21961
With the FASB Board having been "voluntold" to "fix" mark-to-market accounting, I have no doubt that, before the week is out, we will have changes to FAS 157, which will give corporations far greater latitude in the timing of losses on their investment, while protecting the accounting industry from greater liability.
And while clearly the intent of the proposed change to mark-to-market accounting is to delay loss recognition -- with the hope that a looming economic recovery will save the day -- I, for one, believe that the more likely outcome is ultimately an industry of Japanese-style "zombie banks" and a significant lengthening of our economic malaise.
Put simply, for struggling economies like ours, bad news doesn't get better with age. And at every turn, it appears we're choosing to transform a very deep V-shaped recession into a much longer (and, I would offer, not that much less deep) U-shaped one. In a world of too much debt, I think it's critical to recognize that the length of a downturn is ultimately far more important than its depth, for it's that debt's carrying cost that's the silent killer.
With each passing day, fewer and fewer Americans have the financial staying power to survive this crisis - and unfortunately, I believe the accounting industry, clearly under pressure from the government, is about to make things worse.
With each passing day, fewer and fewer Americans have the financial staying power to survive this crisis - and unfortunately, I believe the accounting industry, clearly under pressure from the government, is about to make things worse.
The change in mark to market, the conversion of the worst 2 or 3 tranches of toxic assets to taxpayer balance sheets, the Fed outright buying on Treasuries, all are moves aimed to postpone the final reckoning.
But the fundamental problems still apply:
Jobs are still being lost.
Savings are still being depleted.
Interest on negative equity is still required to be paid.
Each day that goes by (and apparently each week with its 'going postal' event) is another nail in the coffin of untold numbers of American households.
Once this bottom is hit - that household is dead to the economy for many years, neither able to spend nor borrow.
At what point will a threshold be reached where critical mass is achieved for a true full bore Great Depression II irrespective of how 'healthy' banks are?