AMORTIZING LOSSES, INSTEAD OF 'THE MIND OF THE MARKET'
Steve Forbes suggests that the "subprime securities" ought to go off of the currently meaningless mark-to-market accounting, in order to smooth out the balance sheet volatility.
Makes sense. (It helped banks get through the 1980s latin lending crisis, until John Reed at Citibank decided to ... get cheeky and write things down, because he could.)
Not sure what that would mean for all the related derivatives, however ...
Update: It's no panacea though. If Forbes and others, who are getting more vocal, now, had put their energy (and their own money?) into the idea of an industry-wide super-fund to buy-up and mop-up the junk, back when that effort was being spearheaded (even Blackrock got involved), then his friends at Bear Stearns might still be up and running, right? I blogged a lot about that. Suspending mark-to-market isn't going to improve the amount of collateral people will demand or end the need for ratings firms to make "adjustments" to get to a final figure. It's not going to forestall a needed deleveraging, if someone is at 33:1, is it? "Technical insolvency" is probably not something so valuable that accounting mavens would rally behind it...the trend has been the other way, rightly so.
RISK NOT OUT OF RISK-REDUCING MOVE?
The latest foible is that the 30% employee-owned company may not actually approve the deal. ... The equity loss is what is shielding the Fed from blistering criticism, so undoing it might be nettlesome. Either way, everyone will be 'blaming the Fed' pretty loudly for a while, it seems.
FED, TREASURY QUIETLY OPEN DOOR TO ALMOST MONETIZING THE ENTIRE MESS
This is exceptionally bullish, depending on what collateral is accepted:
Gulp! Carrots without sticks? Aiiiieee!
