Ander's Market Theories

[AnderL]

Quote of the Day: Fair Value Accounting
Posted by Barry Ritholtz on Wednesday, October 01, 2008 |

IMO this whole market has been floating on the hot air. Where the SEC would not stand for th cheating of Enron, WorldCom and their ilk independently, when an industry collectively risks the global economy it will turn its head and go so far as to promote the false meme that all is well.

2008 has been an insulting year for the investor. Never has there been such a collectively undermining of free market capitalism. I'm not mentioning the socialization of FRE, and FNM or the $700 billion bailout, or Buffets glee to create a bottom, but the fact that the banks can outright cook the books the whole time their houses are burning and point out that things are not as bad as they seem. That the Fed and Treasury will follow suit. That I actually can believe because the Fed and Treasury have a stake in all of this as well. But that the SEC ignores this and goes so far as to ban shorting because they feel that financials are undervalued. It make me feel like I just found out that the roulette wheel, that the dealer is pressing the red button out in the open and every sees it but with some jedi mind trick is able to convince people that if they call him on it he will walk away and they won't have a chance to win back their money, so they better just keep playing.

It makes one want to leave the market entirely. It will be a cold day in hell if I ever buy a financial stock in the future. But then again you can't win if you don't play.

Wachovia went out with a book value of $75 billion. Citi paid $2 billion. Could it be that asset values are overstated, not understated?

-Michael Rapoport, Dow Jones


Gee, I dunno. Better obscure them as soon as possible . . .

Source:
Lying Bank Accounting
http://norris.blogs.nytimes.com/2008/09/30/lying-bank-accounting/