Posted on 04/02/2009 6:09:37 PM PDT by Kaslin
The mark to market rule makes no sense for mortgages when the mortgages are being paid. If you have a working asset, you have a working asset. Had this rule not been enforced in this manner, AIG would never have needed on dime of tax dollars.
The only time a mortgage asset should change in value for banking purposes is when it is sold.
Makes sense to me. I’ve always thought the previous rule was foolish. Consider that George Bailey’s Bedford Building and Loan is thriving, with customers making deposits, taking loans, and paying their mortgages. Now, if for some external reason, the value of the properties suddenly drop, even if the customers continue making deposits, taking loans, and paying their mortgages, the accounting rules still required bankrupcy. Hopefully now there will be a little more sense in the new rules.
I’m not sure I understand you on this, jveritas. If the free market crash continues, Obama will use it to justify greater government action? If the free market improves, Obama will take credit for it to gain power and expand government? And, what does any of this have to do with “mark to market?”
As I understand it, mark to market is a recently changed accounting rule, and things worked reasonably well before it started.
Mark to market doesn’t even make sense to me. How does one accurately determine market price for something until it’s actually on the market? For example, I might own a stock that is presently selling for $10. If I sold at that precise instant, that stock might (or might not) sell for $10. A week later, it could be much higher or lower.
The true value of a share of stock doesn’t change simply because it’s down in price. Dividends, estimates of corporation’s future earning power, and tax rates may provide a means of estimating the true value of a stock, but the only accurate way to determine its worth (at a given point of time) is to try and sell it.
Obama will take a lot of credit for an up market based on NO real good fundamental economic data. When the public see the market up they think that the economy is doing great and they will credit Obama. Obama policies are working they say. They say Obama is right in spending trillions of dollars on welfare and social program, Obama is right in taxing the heck out of the producers, and Obama is right in printing more money. The media will make sure to tell them that everything is OK because the DOW is up. Is anybody talking about an 8.5% unemployment rate? No. How about the 750,000 lost job last month? No one talking about it. But they are all celebrating a DOW above 8000. All this will benefit Obama greatly. A more politically powerful Obama will go on to impose further socialism. The markets will eventually go down once the whole economy will collapse upon the burden of socialism.
Obama will take credit for anything. I’d still rather our economy bounce back, even if it means Obama takes credit.
Mark-to-Market was a stupid rule. We can make banks do a fair-market evaluation, without forcing them to count all assets as if they had to sell them tomorrow.
Imagine if a store had to “mark-to-market” all of their inventory as if they were going to sell it all tomorrow.
You're wrong. Most all of the banks weren't even marking their toxic assets to market anyways. They are still marking Alt-A's at 95-97 cents on the dollar.
This rule change will have little effect. Wall Street just doesn't realize it yet.
We will see a Dow of 4,000 before we see a Dow of 8,800.
You're wrong. AIG FP engaged in fraudulent practices by selling CDS insurance without having the means to pay out any claims.
That is exactly the trick that most are falling for. The economy is not going to rebound on the long run with the socialism that Obama is imposing. It may be a short term rebound of the markets and a short term rebound of the economy that will serve Obama socialist agenda very well until 2012 but once he is re-elected the whole economy will collapse under the burden of socialism, trillions of dollars in wasteful spending, heavy taxes on the producers, printing more money, confiscating wealth, and government control of more corporations.
Sorry, I can’t hope for bad policies to continue so that the economy crashes more just so we get Obama out of office.
I have to just pray that God has a plan, and that somehow the GOP can get a spine and a message and win back the congress and the white house fair and square, by the power of our superior ideas and philosophy.
There have been some really good points in this thread about Obama’s intent with respect to the markets. I can only add that it appears to me everytime the market seems to get some footing, begins an ascent of some sort, Obama intrudes with some cockamamie socialism event that then sends the market back down. The latest was the ouster of GM CEO Rick Wagoner. These events, as you suggested, do seem orchestrated by Obama to taint any momentum in the markets. It’s becoming uncanny. Stay tuned......
My whole point is when the markets are going up and are indifferent to weak economic fundamentals as in the case today then this will give Obama more power as he takes the credit for the up markets which have a lot of psychological effect on the public. The people will say Obama is right on everything he is doing. Obama will be further encouraged to adopt more destructive socialism that will eventually lead to the collapse of the economy.
“Mark to market was largely responsible for creating the present crisis......”
Bingo!!! (As far as commercial banks are concerned anyway - except for the mega banks)
I’m not sure what the argument is. I’m just saying that mark-to-market was a bad thing, I’m glad they got rid of it, and I can’t be concerned with how Obama might take credit for a market rally due to a bad policy being overturned.
I’m not cheering what the market does. I don’t have any confidence in it, I’m not following it, and I’m not making decisions based on it.
I’m just glad mark-to-market is gone.
I suspect you are correct, this is to give the dumbo talking heads spin.
a loan to a guy who is current on his home loan but just contracted terminal cancer and will work and live 1-2 years will have a very low mark to market value on his loan. His loan will be performing for a while though.
a loan to a guy who just graduated from Stanford business school and is just landed a job that starts in 2 months and may be in default on his loan will nevertheless have a much much higher mark to market value on his loan than the guy with cancer.
many people are current on loans will low low teaser payments but have a 5 year ginormous balloon payment due that they will probably default on. Yes they are current but mark to market gives a more true picture.
the real killer coming up are the option arms. These things let you pay whatever you want and are by default “current”. However, what you don’t pay gets added to your principle. Mark to market says these “performing loans” are soon to blow up.
I am not wrong, AIG was on a margin call that they could not pay.
I think the market is being sabotaged on purpose, too
All it takes is a well timed comment by an “unnamed” source to drive prices up or down
But I think this latest “rally” is being permitted because 1)the market is affecting the messiah’s polls, and
2) even the WH bolsheviks like Rahm Emmanuel Greg Craig and David Axelrod and their useful tool turbotax Tim realize they need to feed the goose (economy) enough to lay some more golden eggs to fund their goals
In most cases, if you take poison it is best to puke rather than to take the long term fatal damage. Obama has made more debt in three months giving money away to every friend he has than all the Corrupt Presidents combined in our entire history! Are you really sure you want this guy in office for another year or three? Better we pass out drunk now than try to drive the freeway home.
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