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Thread: FAS 157 is stupid

  1. #46
    Ultimate Member herosrest's Avatar
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    The Bank for International Settlements (BIS) fosters international monetary and financial cooperation and serves as a bank for central banks.

    The BIS is a forum of discussion and policy analysis among central banks within the international financial community,
    a centre for economic and monetary research, a prime counterparty for central banks in their financial transactions,
    agent or trustee in connection with international financial operations.

    Head office is Basel, Switzerland with representative offices at the Hong Kong and Mexico City.
    Established on 17 May 1930, the BIS is the world's oldest international financial organisation.
    チャットモンチチャットモンチチャットモンチチTHIS MATTERS WHY?ャットモンチチャットモンチチャットモンチチ
    Quote Originally Posted by herosrest View Post
    チャットモンチチャットモンチチャットモンチチャットモンチチャットモンチチャットモンチチ
    10% earnings per share - 13% RoE. Get some NOW!
    チャットモンチチャットモンチチャットモンチチャットモンチチャットモンチチャットモンチチ
    'Enterprise' providing '10% earnings per share - 13% RoE' is to all intents and purpose doubling size each 3 to 4 years. Regardless of where 'earnings' go, the business is squared² each very few years. There is the BUBBLE that is bursting. Capital invested is ultimately accounting squiggles allowing business to survive its bottom line. The logic of business practise was stood on its head by accounting change. Were 13%/10% realistic or even honest............. the entire planet would be invested. It is not. This type of return is UNREAListic.


    These numbers 13% and 10% are about Capital retention. Very much more is going on than meets the eye and very close scrutiny of costs, borrowing, leverage and off-shore dealing and remunerations is neccesary. It is very, very easy that such generous reward becomes Pi in the eye for investor Capital, which is ultimately the squiggle of an accountants pen. Nothing more.
    チャットモンチチャットモンチチャットモンチチャットモンチチャットモンチチャットモンチチ
    --Be Well! Be Free! Luv a TREE.----
    HERE - Detailed tables on semiannual OTC derivatives statistics at end-June 2008 - BORING, SLEEP INDUCING STATISTICS THAT TELL A LITTLE TALE!

    There's nothing like an over view to speed things along.
    Data column totals measured between Dec 2006 and Dec 2007 show massive growth.
    Trading systems and managers analysed US FAS 157 and priced it into their business.
    They pre-empted the accounting change with massive adjustments to Asset values.
    All financial derivative sectors priced in the new accounting rules before they were in effect.
    チャットモンチチャットモンチチャットモンチチTHIS MATTERS WHY?ャットモンチチャットモンチチャットモンチチ
    This is the BUBBLE that burst - it is like 30% of the 2007 OTC derivative maket.
    Tax the cost and exposure of every derivative trade at 4%, demand total trading disclosure in real-time and enfoce compliance by example.
    Crucify a few of these clowns. Let them carry the can!

    チャットモンチチャットモンチチャットモンチチャットモンチチャットモンチチャットモンチチ

    Even when the trading Bosses get IT wrong, the software sorts IT for them!.
    I ship you not...... Trade that.................


    This business must be taxed at source.
    Last edited by herosrest; 03-20-2009 at 04:00 PM.

  2. #47
    Ultimate Member herosrest's Avatar
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    Fair value: confidence trick A case for changing fair value. - Regardless of the argument - if you want to under stand the financial mess - this is the start place.
    It will seem to one and all that HR's wittering on and on.................. he is. Because, no one anywhere seems to have grasped what happened and is yet to come. 30% is being wiped out, because of rule changes for a philosophy of whiter than white THAT DOES NOT DELIVER TRANSPARENCY. All for nothing. A 30% devaluation is everywhere to be seen in comparison statistics since 2006 to date. That it isn't seen is mind boggling.

    But, quietly in truth, up there in the laps of gods - the problems are understood and principled professionals are stiff upper lipping to oblivion. The problems are known about and understood - honesty is the best poolicy - and policy was to force and then enforce honesty. What has happened is chaos - what has happened is a massive deflation and there is no-one alive today with knowledge, let alone experience of such alternative logic unless they live in Zimbabwe.

    21 Oct 2008 - Corporate Reporting Users Forum calls on European Commission to drop proposals for further IAS39 carve-outs
    A senior group of investors and analysts has written an open letter to the European Commission insisting that there be no further carve-outs to the controversial accounting IAS39 during a meeting to be held in Brussels today. The letter, published in the FT, says: ‘Now especially, investors need comparability and transparency, not further uncertainty and inconsistency.’
    - Signed, among others, by Nick Anderson, head of research at Insight Investment and Peter Elwin, head of accounting and valuation research at Cazenove, the names on the letter are all from the Corporate Reporting Users Forum (CRUF), a pan European grouping of investment analysts.
    - The Commission has already endorsed changed made to international standards that bring them into line with US GAAP. But the agenda at today’s meeting tabled much broader changes that would allow all classes of financials instrument to be reclassified and therefore duck the application of fair value accounting.
    - The FT letter says that CRUF believes ‘that further changes, which go beyond aligning IFRS with US GAAP, risk severely undermining the confidence users have in the accounts produced by European companies.’

    Yesterday, the Investment Management Association released a statement saying the proposed changes could threaten transparency and comparability.

    Last week JP Morgan released a paper signalling its disappointment with IASB changes but also stating its objection to further reform of the standards.


    IASB to consider US changes to fair value

    The struggle to develop value evaluation procedures
    comes against a backdrop in which many lawmakers
    view the Financial Accounting Standards Board’s requirements
    for valuing financial instruments, Statement
    of Financial Accounting Standard 157, Fair Value
    Measurements, as having pushed values down to such
    low levels that no one was willing to buy or sell them.
    This, they contend, largely created the present illiquid
    market and frozen credit markets. The bill explicitly authorizes
    the Securities and Exchange Commission to
    suspend FAS 157. More than 60 lawmakers from both
    parties wrote the SEC Sept. 30 urging that it immediately
    suspend FAS 157 (please see related article). Oct, 2008 - http://www.cashflowanalytics.com/art...003article.pdf


    That's it - all done. Never any point waiting to...... 'I told you so'
    Last edited by herosrest; 03-20-2009 at 11:22 PM.

  3. #48
    Ultimate Member herosrest's Avatar
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    For got this one - these guys know.......... Senator Chris Dodd - http://financialexecutives.blogspot....to-market.html

    Closing his response on the issue of MTM, Dodd said, “I am in the category of finding some kind of mechanism - not to be used at any old time - but to put brakes on … [rather than having things] spinning out of control.”


    http://www.sysopt.com/forum/showpost...&postcount=153
    Last edited by herosrest; 03-20-2009 at 11:36 PM.
    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

  4. #49
    Ultimate Member herosrest's Avatar
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    Back to the mystery of 'TRINITY'...... and the QUEST FOR THE 'GRAIL'

    ____





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  5. #50
    Ultimate Member herosrest's Avatar
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    THIS IS A FAMOUS POST! - IT IS A TRUTH.
    THE BIG GUYS MESSED up AS BAD AS IT GETS,
    AND NO-ONE'S GONNA OWN UP!

    GREEKS ARE VERY INTERESTING THINGS.
    They make the world of derivatives go round, wouldn't ya know.
    It's all Al's fault. Al G. Ebra.

    チャットモンチチャットモンチチャットモンチチャットモン チャットモンチチャットモンチチャットモンチチャットモン
    In mathematical finance, the Greeks are the quantities representing the sensitivities of derivatives such as options to a change in underlying parameters on which the value of an instrument or portfolio of financial instruments is dependent. The name is used because the sensitivities are often denoted by Greek letters.

    The Greeks are vital tools in risk management. Each Greek measures the sensitivity of the value of a portfolio to a small change in a given underlying parameter, so that component risks may be treated in isolation, and the portfolio rebalanced accordingly to achieve a desired exposure; see for example Delta hedging.
    The Greeks in the Black-Scholes model are easy to calculate, a desirable property of financial models.
    Please note that 'Black-Scholes' rhymes with Back Holes. The equations for which are more than similar.
    チャットモンチチャットモンチチャットモンチチャットモン チャットモンチチャットモンチチャットモンチチャットモン
    Theta, or "time decay," measures sensitivity to the passage of time (see Option time value). Θ, . The value of an option is made up of two parts: the intrinsic value and the time value. The intrinsic value is the amount of money you would gain if you exercised the option immediately, so a call with strike $50 on a stock with price $60 would have intrinsic value of $10, whereas the corresponding put would have zero intrinsic value. The time value is the worth of having the option of waiting longer when deciding to exercise. Even a deeply out of the money put will be worth something as there is some chance the stock price will fall below the strike. However, as time approaches maturity, there is less chance of this happening, so the time value of an option is decreasing with time. Thus if you are long an option you are short theta: your portfolio will lose value with the passage of time (unless there is enough volatility to offset this).

    Traders with a high theta position are known to describe this as "bleeding theta".
    Which is what accountants did not understand or allow for in FASB-157.
    They cocked it up, big time! As big as mistakes get.
    チャットモンチチャットモンチチャットモンチチャットモン チャットモンチチャットモンチチャットモンチチャットモン
    Derivative trading is speculative insurance.
    It must be open, honest, declared, licenced, taxed and transparent.
    IT works, delivered the longest post war run of prosperity ever and contrary to accepted wisdom,
    remains in profitable practice to this very day. It is the life blood of Trade.
    That dealers and traders got stupid with the profits and risks is a matter of compliance and l told you so!.
    That accounting bodies do not understand it and stomped on it is unforgivable.
    That the tax man is not benefiting from it is ridiculous.
    That it is not supervised by oversight is the oversight.

    That derivative trading will just go away is insane outlook.
    チャットモンチチャットモンチチャットモンチチャットモン チャットモンチチャットモンチチャットモンチチャットモン
    Last edited by herosrest; 03-21-2009 at 03:46 PM.

  6. #51
    Complete & Utter Member j.m@talk's Avatar
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    ***YAWN***

    BET YOUR FUN @ PARTIES


  7. #52
    Ultimate Member herosrest's Avatar
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    That's kinda cool... for 40 grand lifted out of yer back pocket and a lot more to follow. Titter...........
    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. #53
    Ultimate Member herosrest's Avatar
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    's a youtube video here http://www.youtube.com/watch?v=a42bD...eature=related - not a bad tune - l fired up the video in the hi def mode and was just surprised by the gaming graphics - any one know what game it is?

    l then bumped into an old fave - Jaclyn Talbert - http://www.youtube.com/watch?v=0T_BE3N3JIA - strumming out a cover of 'closing time'. l just love the cover and reckon jaclyn's cool - mind you at about 2 mins 18 seconds in, l reckons several cats were strangled, more than once.

    A decent li'l bass riff 'll keep her in time and rhythm.
    Last edited by herosrest; 03-21-2009 at 05:58 PM.
    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. #54
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    l reckons several cats were strangled, more than once.
    It wasn't a total waste then.

  10. #55
    Ultimate Member herosrest's Avatar
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    A comparison is often worth a hundred words.
    The use of fair value accounting for derivative trading was like trying to nail jelly to walls. They are dynamic, that is what they are about, that's why they attract chancers and the business must be measured and accounted, not swept off balance sheets by mumbo jumbo and gobbledeegeek. If accountants and auditers knew of the growing 'size' of problem - they are single handedly to blame. If broadly, they did not know, then a fraud had to be conducted to fool them.

    The exploding market for all types of over the counter derivative trades needed to be common knowledge, broadly discussed and flagged as a hot topic. That is the auditors job. That is why they are there, beyond fee's and livliehood. They matter and must be listened too . They are, more so now but an awful amount of damage is done. Was it all worth it, 'cos it truly is a disaster. One that should not have happened. Implementing new accounting practice has led to disaster. The people who understood, early on had either helped cause it or kept quiet about implications and trusted to luck.

    People who will call it what it is - are rare in the public eye, one is sorely needed today!

  11. #56
    Ultimate Member herosrest's Avatar
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    A word about value
    FASB and IFRS are about to change their guidelines on how to do a valuation for the second time in less than a year. Third time lucky perhaps?

    But either (a) the guidelines were defective in the first place, OR (b) the new ones will be defective, OR (c) both. That's not a good thing to find out in the middle of a financial crisis.

    No wonder Treasury Secretary Geithner is having a problem valuing those toxic assets, just like his predecessor; what it's been more than six months now and they STILL haven't figured it out. One might have thought that they have all the time in the world.
    Will the FASB and IFRS Admit They Made a Trillion Dollar Mistake?

    Why did God invent economists?
    So accountants could have someone to laugh at.

    What's the definition of an accountant?
    Someone who solves a problem you didn't know you had in a way you don't understand.

    What's the definition of a good tax accountant?
    Someone who has a loophole named after him.
    ACCOUNTING

  12. #57
    Ultimate Member herosrest's Avatar
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    Anything that purports to describe the last 18 months as 'efficient' seems like a cruel joke
    "We suspect the academic community will have a hard time explaining away the destruction of half of the value of the U.S. stock market in a little over a year after it took 70 years to create much of that same wealth," the analyst said. The recent market collapse also discredits the common wisdom of near-certain returns if one holds stocks for five to 10 years.

    All the factors that created the market's collapse were hiding in plain sight in brokerage firm 10-K filings and news reports about the housing and mortgage markets. Hundreds, if not thousands, of individuals knew the risks in the collateralized debt obligations and credit default swaps marketplaces. Many of them even work in one place -- New York City.

    What no one even contemplated though, was the assimilation of the entire housing asset 'into' into its 'sub sector' of 'property sales' for 'derivative valuations'.

    No one understood, or even fathomed this biggest ever procedural accounting mistake. It is still not recognised today. It is a suicidal mis-theory of economics to practice revaluation of the Major by its minor subset. Cash flow does not a property value. There are nut jobs ruining the world economy - people in charge of the economy do not know what they are doing.
    The effin' lot of them. They have even admitted it - at Davos!


    This stuff is not rocket science. Take that theory into the school yard and 10 year olds will fall about laughing at its stupidity. Trading practice hi-jacked economic theory. Oh yey!
    Global recession stalls skyscraper construction

    Construction workers are accustomed to boom-and-bust cycles but this downturn appears deeper and longer. The impact of lost wages of $35 to $40 an hour ripples through the economy. "People out of work, people lose their homes, people lose their hospitalization, people lose all their benefits," said Tom Villanova, president of the Chicago and Cook County Building Trades, which covers 100,000 construction workers. "It's as bad as I've ever seen it, and I've been around for 30 years".
    Last edited by herosrest; 03-23-2009 at 12:59 PM.

  13. #58
    Ultimate Member herosrest's Avatar
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    The above post - will be appearing as Front page advertiments tomorrow on the FT, WSJ and Washinton Post -
    sponsored by several nests of ants down by the river side!

    Yes folks - Financial Ant-ticks..............



    "The academic community will have a hard time explaining away the destruction of half of the value of the U.S. stock market in a little over a year after it took 70 years to create much of that same wealth."
    Last edited by herosrest; 03-23-2009 at 01:57 PM.

  14. #59
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    Can I ask, how do they wire their networks, in India.
    The electricity is the most bizarre I've ever seen.
    A spaghetti of wires all running from dangerous looking out of alignment telegraph poles.
    With what look like illegal connections tapping power from them.
    If their fibre links are anything like that, I dread to think what their failure rate and connection speeds are.

  15. #60
    Ultimate Member herosrest's Avatar
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    As ever, werz hit hammer right on head with the nail, deeply profound, searching, analysis of webworld India.....
    There is no definative knowledge on the matter west of the Guphta's so it definately seems Werz is off on a whirlwind fact finder to.................. India. Yey, fact finding envoy... how do their bits flow?
    Check out those call centres while yer there man, point out that basic command of english language is helpful and that chipati's are actually large fharting northerners.

    For the nerds and Gobble dee geek........ Chapati historically and originally finds mention in Ain-i-Akbari , a 16th century document, by Mughal Emperor Akbar’s, vizier, Abu'l-Fazl ibn Mubarak.
    Originally they did not come ready salted.
    Last edited by herosrest; 03-23-2009 at 02:43 PM.
    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

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