Thursday, February 05, 2009

I wondered what turn the market on a dime..

The market shot up around 10:30am on nothing but bad news. However, a rumor is circulating that the SEC is going to overturn mark to market accounting.

This rumor has floated many times before, but if it were to pass it would probably lead to a substantial little rally.

In my opinion, this is an awful idea. As I've said before, mark to market accounting forces accountability and is a real representation of assets. Without mark to market we're all dealing in fiction. Basically, if I think my beanie babies are worth $10,000,000, that's what I get to put on my balance sheet (just replace beanie babies with any worthless asset that the banks hold).

It's an awful idea, but that doesn't mean it won't get passed.

2 comments:

Anonymous said...

I think that Mark to Market for realestate should be changed to directly link to property tax assessment. Just think about that for a bit before you respond :)

The Artful Blogger said...

Boy that would be nice. However, a 30% reduction in my assessement would probably just lead to a 45% increase in my tax rate.

However, I can't complain too much. At least, I'm not paying taxes in NJ - they are in real trouble.