Tuesday, April 21, 2009

Still not the truth

J. S. Kim (htp: Jesse) considers the $700 trillion derivatives market (worth maybe 23 times all the stockmarkets in the world), and notes that it's being used to disguise the true woeful state of the banking system. It is as though, when listing his personal assets, a compulsive big-time gambler could include all his current Lottery tickets and horse-racing betting slips:

"... when FASB suspended mark-to-market accounting rules recently, major international banks were allowed to re-value some of their derivative products closer to their notional value on their books to pad their balance sheets. Due to this change in accounting law, I can almost guarantee you that before market open Friday, Citigroup will announce better than expected financial results as they carried huge amounts of illiquid mortgages and financial derivatives on their balance sheets."

I fear that many major banks may be thoroughly ruined, and until the lying stops, effective action cannot be taken.


Nick Drew said...

yes, the suspension of MTM may prove to be one of the great Bad Decisions of our time

incidentally, it's entirely of a piece with NuLab's 2007 diktat that only banks can report banking & credit-card fraud (i.e. not the victims)

what ghastly goings-on are taking place under these dishonest cloaks ?

Paddington said...

The entire financial system is a non-workable entity in a technological age. Our leaders are either too afraid or too ignorant to say that.

Wolfie said...

I think it would be more accurate that political corruption and idealism broke it Paddington but the result is the same.