{"id":195543,"date":"2008-07-01T17:24:00","date_gmt":"2008-07-01T22:24:00","guid":{"rendered":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/07\/01\/shorter-financial-industry-response\/"},"modified":"2008-07-01T17:24:00","modified_gmt":"2008-07-01T22:24:00","slug":"shorter-financial-industry-response","status":"publish","type":"post","link":"https:\/\/www.panix.com\/~msaroff\/40years\/2008\/07\/01\/shorter-financial-industry-response\/","title":{"rendered":"Shorter Financial Industry Response"},"content":{"rendered":"<p><a href=\"http:\/\/pic60.picturetrail.com\/VOL1689\/10590113\/19957526\/323641271.jpg\"><img decoding=\"async\" style=\"margin: 0pt 10px 10px 0pt; float: left; cursor: pointer;\" src=\"http:\/\/pic60.picturetrail.com\/VOL1689\/10590113\/19957526\/323641271.jpg\" alt=\"\" border=\"0\" \/><\/a>So, it appears that the financial services industry is now <a href=\"http:\/\/iht.com\/articles\/2008\/07\/01\/business\/sorkin.php\">objecting to pricing assets on their balance sheets at market value<\/a>, because it makes their balance sheets look pretty sick.<\/p>\n<p>Let&#8217;s be clear on this:  these companies bought a bunch of highly complex financial instruments, ones that <span style=\"font-weight: bold;\">they themselves did not understand<\/span>, and now no one is willing to buy this toxic waste at anything even remotely near to face value.<\/p>\n<p>Stephen Schwarzman, the co-founder of the Blackstone Group, thinks that the accounting rule, FAS 157, which requires that you place your investments on the books at fair market value, is too high a standard, and that,&#8221;the rule is accentuating and amplifying potential losses.&#8221;<\/p>\n<p>What is amplifying the rule is traders and senior executives dealing in pixie dust, because they got a commission for doing so.<\/p>\n<p>Note that <span style=\"font-weight: bold;\">SOME<\/span> companies have been doing mark to market for a <span style=\"font-weight: bold;\">long<\/span> time:<\/p>\n<blockquote style=\"color: rgb(0, 0, 153);\"><p>But Goldman Sachs proved why FAS 157 works: Goldman has been marking its books to market for years, and as a result, its risk officers were able to hold back its go-go traders from making bad bets when everyone else was throwing their chips last year into the subprime game.<\/p><\/blockquote>\n<p>Will no one rid me of these turbulent brokers?<\/p>\n","protected":false},"excerpt":{"rendered":"<p>So, it appears that the financial services industry is now objecting to pricing assets on their balance sheets at market value, because it makes their balance sheets look pretty sick. Let&#8217;s be clear on this: these companies bought a bunch of highly complex financial instruments, ones that they themselves did not understand, and now no &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[970,1004,985],"tags":[],"class_list":["post-195543","post","type-post","status-publish","format-standard","hentry","category-corruption","category-finance","category-regulation"],"_links":{"self":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/195543"}],"collection":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/comments?post=195543"}],"version-history":[{"count":0,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/posts\/195543\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/media?parent=195543"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/categories?post=195543"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.panix.com\/~msaroff\/40years\/wp-json\/wp\/v2\/tags?post=195543"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}