As per our earlier post, we see this amusing cartoon, just in time for earnings season:
Source:
Pepper . . . and Salt
WSJ, October 2, 2007
http://online.wsj.com/article/SB119129135204546029.html
Our Financial Statement
October 2, 2007 9:55am by Barry Ritholtz
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First Brokers, Now Banks: More Fictitious Gains
I suppose this means we can lump the FASB up there with S&P, Moodys and Fitch?
There are ways to sort through accounting but ‘Street’ analists are paid to cheer not jeer.
Barry, I have one better. Here’s proof the FED collectively is a cesspool of liars and thieves because nobody can be this stupid:
Greenspan Sees `Rethinking’ on CDOs After Subprime Collapse
By Jennifer Ryan
Oct. 2 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan said that there will be “some rethinking” of collateralized debt obligations after the collapse of the U.S. subprime mortgage market.
“People always say it’s the subprime market that created this crisis. It’s the subprime asset-backed market” which did, Greenspan told investors in a discussion at Bloomberg LP in London. “As a consequence of that there’s going to be some rethinking about collateralized debt obligations.”
Central banks have raised concern about the way markets assess the risk of CDOs, which are bonds based on underlying debt and other assets. Bank of England official Andrew Haldane said Sept. 28 that banks’ tests for assessing the impact of financial shocks on CDOs are “completely hopeless.”
“The pricing which in too many cases has been, by some model derivation, four times removed from actual market prices, just doesn’t work,” Greenspan said. Still, CDOs “serve a useful purpose.”
While financial innovation has been “a net plus to the community” for the new products that have been created, “there is got to be a limit as to how many you can create, and we’re way past that limit as far as I am concerned,” he said.
“A lot of structured products are going to have short life expectancies,” Greenspan said.
One in five managers of CDOs is likely to be forced to cut costs or go out of business as investors avoid the securities following losses on subprime debt, Fitch Ratings said Sept. 24. As many as 40 percent of managers focused only on asset- or mortgage-backed bonds may be “impaired,” Fitch said.
Haldane, the U.K. central bank’s head of market infrastructure, called for a “fundamental rethinking of the way we do stress testing,” in a speech last week in Chicago.
I suppose this means we can lump the FASB up there with S&P, Moodys and Fitch?
There are ways to sort through accounting but ‘Street’ analists are paid to cheer not jeer.
Posted by: Ross | Oct 2, 2007 10:21:45 AM
I made this same point last week with the Level I, II and III complete bullshit accounting. The entire system seems rigged against the little guy.
I suppose this means we can lump the FASB up there with S&P, Moodys and Fitch?
Posted by: Ross | Oct 2, 2007 10:21:45 AM
Go ahead and also lump in…
– Sarbanes-Oxley
– Marked To Model
– CPI
– Level I, II, III accounting (SPECTRE of Deflation)
– TIPS
– “Truth In Lending”
– “Trust Me” (Hollywood style)
Of course Greenspan, like all generals, is always fighting the last battle. The market has already moved on Mr. Greenspan
The means by which accounting firms collect fees is no different than the means by which rating agencies collect their fees. The inherent conflict of interest to shareholders is obvious. I don’t know the solution but I do know that financial integrity reporting “compromises” are made in order to keep the very largest of accounts. For far too many, greed grumps integrity.
Ford’s in big big trouble. They issued as collateral 100% of their assets for that past loan bailout. 20% fall in sales…you can be sure that those “investors” are getting their pencils out to figure the current worth of those assets.
Stuart,
If the dreadful news on home sales this morning caused homebuilder’s shares to explode, maybe I need to buy some automaker’s stock…
black is white, night is day, “these are not the droids you’re looking for…”
” “these are not the droids you’re looking for…” ”
excellent. LOL
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