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Thread: FAS 157 is stupid

  1. #91
    Ultimate Member herosrest's Avatar
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    Supporters of the mark-to-market rules say they're necessary to provide accurate information to investors, and that any weakening of the rules allows banks to overvalue their assets.

    This is the basic and valuable principal defended with accounting rules changes such as FASB-157 in the past.

    'Mark to Market' actually devalues financial assets, Capital, and enables predatory speculation in share trading. This is because the roots of 'Market to market' are based in the banana trade that existed several thousand years ago at Atlantis.

    No honest or ordinary person will ever believe it is possible to 'profit' from falling prices and devaluation. We have much to learn about the people reaping reward from doing this very thing. It defies laws of mathematics, physics and common sense though obviously not Trading practice.
    Last edited by herosrest; 04-02-2009 at 07:08 PM.

  2. #92
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    Speculative short trading is fraught with risk, High price stocks are to expensive to manipulate. Once a short trading target is put in play, speculation has vested interest in maintaining a lowered price. Price is the entire game. 'Mark to market' wraps up Financials in a pretty bow, devalues them and Lehmans fulded.

  3. #93
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    BYe, bye Motown. - Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and buses after that.

    The goal, which radiates from the very top of the Chinese government, suggests that Detroit's Big Three, already struggling to stay alive, will face even stiffer foreign competition on the next field of automotive technology than they do today.
    "China is well positioned to lead in this," said David Tulauskas, director of China government policy at General Motors.

    There are advantages in running a command economy. Chinese leaders can snap their fingers and force the production of such cars, the purchases of such cars, and the installation of electric power-up stations throughout the nation. Sure, designing and building good products is always a challenge. But the Chinese government is in a better position to compel change than the US Energy Department, which has its own $25 billion program to develop electric-power cars.

  4. #94
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    At some point, all those 'hehe', invested Hedge Fund assets are going to replicate the property market crash......... that should balance the books, eventually. Wait, just wait and watch....... talk about a panic.... haha! Just lemmings discovering the value of cliffs.

  5. #95
    Ultimate Member herosrest's Avatar
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    FASB-157 was perhaps the regulatory blunder of all time. A battery of howitzers to crack a peanut. Arrogance sublime. Here's why - No one would address the real problem. CRIMINAL ACTIVITY at the top echelons of business management. No one who should have, would send in enforcement or blow whistles. The problem was handed to................ an accountant. He did a very brave job. Credit to him but it was never going to work. The wrong answer to the wrong problem brought about disaster - to the tune of -30% valuation adjustments which had pee running down peoples legs.

    The procedure changes introduced during 2006/2007, to correct accounting anomolies which 'could' be 'used' to inflate value were a noble attempt to address criminal business behaviour. The problems addressed were not identified correctly and impact of the rules in practical and financial senses, was not appreciated, understood or mitigated.

    Suddenly, very, very, suddenly, a system which reflected future values, ie endevour, opportunity and reward was changed to here & now, a 'backstreet market' system of accounting. The basic tenets of the changes are unarguably correct, their implications though are impractical in modern business. FASB-157 and its associated conundrum of accounting straight jackets was as dumb as it can get in terms of human nature. Criminals are simply that, criminal, unfortunately many of the few criminals responsible for the scandals which brought about the accounting changes had friends and puppets with influence and pull. These criminals also had open access through lobbying to people at all levels of society able to influence decision making.

    Everyone, the entire planet of people, are paying a terrible price for the failure of NOT enforcing perfectly good accounting practice and allowing a few rogue Bulls to spoil the party. Financial greed built inflation into Financial accounting. The bubble which burst was a banking finance bubble of a scale that is unimaginable. It was madness by insane criminals. The easy fix, let an accountant sort it out. Insanity.

    There is nothing to do but laugh, then smile, then call in the Marshalls and stop jerking around with a bunch of hard ball playing criminals who call themselves Bosses. A criminal is exactly that, what ever way their cloth is cut. Send in the Marshalls, clean up and clean out the robber barons who use business and finance to steal, robbing the world blind. Lets hear it for honest profit and the good guys who build stuff and create jobs and hope and prosperity and are not unduly greedy or playing games with other peoples money and taking an arm and a leg in interest rates and personal remuneration. Greed can be spotted from orbit, let alone the office next door.
    During deep sleep IT came to me and the future of processing is clear.
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  6. #96
    Ultimate Member herosrest's Avatar
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    ...... and now, the final insanity. A court-appointed examiner investigating Lehman Brothers Holdings Inc.'s bankruptcy has been exploring whether the Federal Reserve improperly cut in front of other creditors owed money in the $613 billion bankruptcy case, records show.

    Regardless of politics and power and in honesty, regardless of anything, what is the point of tying both arms and legs behind the back of the only people who can know or find out what is happening and do something, anything, to respond. Lunacy stalks the corridors of finance and power. Utter, complete self interest beneath all logic. The world is going insane!


    I have the answer - Pure inspiration, this is genius - De-regulate. De-Regulate everything, hehe!
    insane!
    Last edited by herosrest; 10-06-2009 at 07:06 AM.
    During deep sleep IT came to me and the future of processing is clear.
    Future processors will primarily be digital tuning radios acting as grid computing nodes.
    Voila. See ya in hell.
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  7. #97
    Ultimate Member herosrest's Avatar
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    Yawn not.
    A 30 second read will make you as bright as any genius trader or economist!


    Charts here http://www.census.gov/indicator/www/ustrade.html and here http://www.census.gov/foreign-trade/balance/c0004.html indicate trade data and balance.

    Worthwhile business page news that is much more leave it than take it to a significant majority, it is what is, an indicator of the greater sphere of things. And yet from the second chart, upon closer examination, simply comparing 2009 figures with 2008, which l did last year and 18 months ago, you can, actually see, the size of problem the world economy faces. The charts are US, used here simply because they are easily available and well presented.

    Different ways of compiling the numbers throw up different totals, but give an overall view of things. Thus, like for like months, 2008 compared to 2009 show the size of the hit to economies which took place. 18 months ago and endures.

    It was a gigantic slump in numbers. Fuel was part of the difference, but not that great a part. Every comparison, 20 - 30%. A disaster that simply is not reported or considered. It was and remains the ROOT of it all.
    During deep sleep IT came to me and the future of processing is clear.
    Future processors will primarily be digital tuning radios acting as grid computing nodes.
    Voila. See ya in hell.
    PROCESSING

  8. #98
    Ultimate Member herosrest's Avatar
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    The worst & MOST EXPENSIVE regulatory blunder - ever! FASB-157 THE TIMING WAS NO CO-INCIDENCE.
    During deep sleep IT came to me and the future of processing is clear.
    Future processors will primarily be digital tuning radios acting as grid computing nodes.
    Voila. See ya in hell.
    PROCESSING

  9. #99
    Ultimate Member herosrest's Avatar
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    Hmmmm.. close of business, Friday.


  10. #100
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    $50bil sought from Lehman Bros, I'd be interested in the $600billion that was reportedly transferred to Israel the day before Lehman Bros declared it was in financial trouble, and that was the one and only time I read about this transfer, it's just never been mentioned again.

  11. #101
    Ultimate Member herosrest's Avatar
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    That transfer did not complete properly, the wrong account no's and bank id were entered. I've kept quiet, and so far, nothing. There's no way i'm paying it back, unless asked politely but l don't believe it is even missed yet. You wouldn't believe the amounts of interest generated from 90 day deposits........... quite mesmering all those zero's. The statements are 17 feet wide. I think the people who cocked it up were fired that day and l ain't letting on. No way!. l mean what would 'they' do with it? But a few F-15's. It's doing fine right where it is.
    Last edited by herosrest; 10-10-2009 at 12:07 PM.

  12. #102
    Ultimate Member herosrest's Avatar
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    2006/2007 - The world in all its parts was a booming and rapidly expanding adventure. At the root of it all was finance, leveraged to the max as all understand. Those extremes of investment and expectation today stand tempered and paired back. That is the financial scene. However, the expansion which was fuelled has not completed its cycle of business although that will take place as contracts and finance complete contracts. Each of the major economies have multiple sectors of their economies going into distress as the real economy pays back into the Financial one. Solving yesterdays problem will destroy major economies - the problems are still maturing because it was an entire business cycle which was ruptured. It has a long way to go yet and will just keep bumping along, problem after problem.

    There are areas of modern life and its infrastructure that have to be addressed one way or the other and it is time to just get on with it. Resources have to be propelled into life now and that previous venture into the realms of excessive greed, written off and seen for what it was, a disaster caused by unregulated morons.

    Everywhere you look, in every economy, serious financial losses and difficulty, shipping in Germany, a 10% reduction in Russian GDP, Swedish Banking over extended in Latvia, Iceland's economy wrecked but not yet sunk, India shrinking and on and on. China sails right along, focused on basics, infrastructure and investment. They are showing the lead, like it or not they hold the answers to matters. Whatever it is they are doing - IT WORKS!
    During deep sleep IT came to me and the future of processing is clear.
    Future processors will primarily be digital tuning radios acting as grid computing nodes.
    Voila. See ya in hell.
    PROCESSING

  13. #103
    Ultimate Member herosrest's Avatar
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    The Economics GAAP

    Two points l raise.
    1 - If the GAAP rules are all they promise, then of course accountants are no longer required. They are defunct and computerised process of the rules carries the day. No more accountants, they are defunct. This of course will not occur.

    Imposing GAAP rules has caused a financial meltdown because accountants do not practice Classical economics. The basic process of economics, the classical dichotomy is not enforced by the rules put in place. This can only have occured because either it was ignored or accountants are stupid. Both are the case. Industry and wealth creation stand to be destroyed by the arrogance of these people and their stupidity.

    2 - No economy in history, has survived a 30% DEVALUATION. That is what is taking place now, it has begun working through the REAL economy to destroy demand and is of sufficient scale to endure. Its effects will not diminish, they will amplify into 3-5 year Finance now and into the real economy and then into 5-7 year Finance by which time Real economies everywhere will have collapsed because BANKS are unable to lend as EQUITY continues to vapourise. GAAP economics are BOLLOX dreamt up by morons.


    Someone, who can put this madness to an end - had better wake up soon!

    There will be no GROWTH - IT cannot occur.

    Last edited by herosrest; 10-18-2009 at 08:27 AM.

  14. #104
    Ultimate Member herosrest's Avatar
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    FAS 168 is now complete. With the issuance of the FASB Accounting Standards Codification came a single source of authoritative U.S. generally accepted accounting principles for nongovernmental entities—and a major change in the way CPAs view, research and evaluate the application of GAAP. Bean Counters, own your little donkey. In acheiving this control of all the world's money they devalued the world of finance by 30% and because they fundamentally ignore BASIC Classic economics, have caused a meltdown of the real economy that cannot be halted.

    Accountants are accountants - they are not economists. The world now has an economy run and administered by accounting rules which place a straight jacket, binding and enforcable on innovation. To an accountant, innovation is irrelevant. Innovation has however been the prime and only method of resolving economic dilemmas. Accountants would not do their job - cry wolf when errors of valuation occured. They could not and would not do their duty. They failed and in answering their own shortcomings have brought about a disaster that is not yet even begun to manifest itself. The theory is that growth and inflation, will during the next 10 years solve the pain that has been introduced by these rules and life will ever thereafter be a rose tinted palace of joy for accountants. Unfortunately accountants are corrupt, corruptable and irresponsible. They do not create wealth, they do not administrate wealth - they report it. They sit in corners and count other peoples money so of course they are the most important people on earth, aren't they. Let's go and ask the Swiss, shall we. They'll know the answer, oh.... client confidentiality! Phfttt......... It's a game, isn't it.


    http://www.calcpa.org/Content/25577.aspx - The message to fans of the GAAP Concepts, which define the most fundamental terms used in the accounting profession, is once again: Be patient. Accounting standard updates issued after the effective date of FAS 168 will not be considered authoritative on their own. These updates will modify the Codification, provide background information about the guidance and explain the basis for the change in conclusion(s) in the Codification. Additionally, once FAS 168 becomes effective, all nongrandfathered, non-SEC accounting literature that is not included in the Codification is superseded and deemed nonauthoritative.

    Economics is the social science that studies the production, distribution, and consumption of goods and services. Accountancy or accounting is the communication of financial information about a business entity to users such as shareholders and managers.

    Accounting rules are changing, for example FAS 157 was inflicted upon the world. Former FDIC Chair William Isaac placed much of the blame for the subprime mortgage crisis on the Securities and Exchange Commission and its fair-value accounting rules, especially the requirement for banks to "mark-to-market" their assets, particularly mortgage-backed securities. Whether or not this is true has been the subject of ongoing debate.

    With the issuance of the FASB Accounting Standards Codification came a single source of authoritative U.S. generally accepted accounting principles for nongovernmental entities—and a major change in the way CPAs view, research and evaluate the application of GAAP.

    FASB Statement No. 168, which becomes effective for financial statements issued for interim and annual periods ending after Sept. 15, 2009, replaced FAS 162, The Hierarchy of Generally Accepted Accounting Principles, which became effective in November 2008.

    When FAS 162 was issued, the GAAP hierarchy set forth in SAS 69 was moved from the auditing standards into the “home” in which it truly belongs: the accounting standards. While FAS 162 essentially kept the GAAP hierarchy intact, it reaffirmed that the responsibility to prepare financial statements in accordance with GAAP rests on a reporting entities’ management, rather than its outside auditors.

    Moreover, FAS 162 recognized the various authoritative sources of GAAP and presented a hierarchal structure containing categories (a) through (d) GAAP, with Category (a) as the most authoritative. Some readers may be asking why FAS 162 has become extinct before the paint is barely dry. The answer is that FASB had much bigger plans in place that involved moving on up to FAS 168.

    The debate arises because this accounting rule requires companies to adjust the value of marketable securities (such as the mortgage-backed securities (MBS) at the center of the crisis) to their market value. The intent of the standard is to help investors understand the value of these assets at a point in time, rather than just their historical purchase price. Because the market for these assets is distressed, it is difficult to sell many MBS at other than prices which may (or may not) be reflective of market stresses, which may be below the value that the mortgage cash flow related to the MBS would merit. As initially interpreted by companies and their auditors, the typically lower sale value was used as the market value rather than the cash flow value. Many large financial institutions recognized significant losses during 2007 and 2008 as a result of marking-down MBS asset prices to market value.

    For some institutions, this also triggered a margin call, where lenders that had provided the funds using the MBS as collateral had contractual rights to get their money back.[9] This resulted in further forced sales of MBS and emergency efforts to obtain cash (liquidity) to pay off the margin call. Markdowns may also reduce the value of bank regulatory capital, requiring additional capital raising and creating uncertainty regarding the health of the bank.

    It is the combination of the extensive use of financial leverage (i.e., borrowing to invest, leaving limited room in the event of a downturn), margin calls and large reported losses that may have exacerbated the crisis. If cash flow-derived value — which excludes market judgment as to default risk but may also more accurately reflect 'actual' value if the market is sufficiently distressed — is used (rather than sale value), the size of market-value adjustments under the accounting standard would typically be reduced. One might question why banks or GSEs (Fannie Mae and Freddie Mac) are allowed to use high-risk, difficult-to-value assets like MBS or deferred tax assets as part of their regulatory capital base. Whether a margin call is involved is not part of the accounting standard itself; it is part of the contracts negotiated between lender and borrower.

    Critics charge that claims that this had happened are akin to claiming "the problem, in short, is not that the banks acted irresponsibly in creating financial instruments that blew up, or in making loans that could never be repaid. It is that someone is forcing them to fess up. If only the banks could pretend the assets were valuable, then the system would be safe." Existing assets were revalued not by market or exchange but by accounting valuation rules. What = a now = b. The accounting rules valued assets not the market. Margin was ignored and a discount created to true value. Assets were devalued by 30%. The FASB 'HAVE' removed TRUE value from assets. This occured because of the accounting rules - no other reason.

    The argument in respect of the effect of accounting rules changes upon values they report - falls in favour of those stating that the exercise is a revaluation. It discounts margin. This is a central issue that is now about to be repeated by an arbitrary revaluation of assets subjected to FAS 166 & 167. These rules eliminate the classical economic dichotomy.

    In economics, a margin is a set of constraints conceptualized as a border. A marginal change is the change associated with a relaxation or tightening of constraints — either change of the constraints, or a change in response to this change of the constraints.

    In finance, a margin is collateral that the holder of a position in securities, options, or futures contracts has to deposit to cover the credit risk of his counterparty (most often his broker). This risk can arise if the holder has done any of the following:
    borrowed cash from the counterparty to buy securities or options,
    sold securities or options short, or
    entered into a futures contract.

    FAS 168 is now complete. With the issuance of the FASB Accounting Standards Codification came a single source of authoritative U.S. generally accepted accounting principles for nongovernmental entities—and a major change in the way CPAs view, research and evaluate the application of GAAP.






    During deep sleep IT came to me and the future of processing is clear.
    Future processors will primarily be digital tuning radios acting as grid computing nodes.
    Voila. See ya in hell.
    PROCESSING

  15. #105
    Ultimate Member herosrest's Avatar
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    Before their task is complete and we are all corrected, each and every one of us will have these provided in memento to sit in the back garden.
    We 'will' each bow correctly.


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