Economic Controversy: Mark-To-Market...sensible accounting or market poison?

[hucgirl8]

Not too harsh Jacob, the truth hurts! Reality bites, let them see the other side for once! Good video, I like the outdoor video add on please show us Idaho, AZ is so dry LOL. Thanks

[hermbilliamherm18]

i like how your videos engage conversation bud! keep em coming!

[ABOSOLUTEKNOWLEDGE]

hey cheaf

did u seen the obama deception?

movie? check it out

[sharkbone360]

Man I like your videos. This is an excellent subject. They should also reinstate glass-Steagall. The purpose of the Glass-Steagall Act was to control speculation and prohibit a bank from owning other financial institutions which would create a conflict of interest, such as investment banks and insurance companies. The Glass-Steagall Act was enacted in 1933 after excessive risk-taking that contributed to the Great Depression.

Sound familiar???

[drutter]

So what you're saying is, the banksters, those wanksters, are going to start getting a taste of their own medicine?

It feels like, at least for myself, the bottom has fallen out of the entire game we've been playing for the past 100 years or so. The more awake I get, the less I can believe I used to be just like all the sleeping sheep I see all around. The creepy, drooling, gaggling walking dead, basically. Okay, that was too harsh. :D

[AwakenSafely]

I don't know that it was too harsh, Drutter! I think most of the "civilized" world is operating in a zombie-like nightmare. Debts and unsustainable materialism are eating up the precious moments of life... Banks and finance companies merely feed the flame (witness the "touching" Mastercard commercials!...... "...priceless...for everything else, there's Mastercard""  BLECH!)

[drutter]

It's really good to meet other people that feel the same way I do. I just wish there were more of us....

[slobomotion]

I recently heard a good radio documentary called "Bad Bank" on a series called, I think, "This American Life." It explained "mark it to market" quite well.

I have an MBA from the best accounting school in the world (at least it was when I studied there), and the best accounting is the accounting most true to reality.

No matter how "painful" that may be.

[mrcool011]

I need a life, I think I comment on most your videos, but in my defense you usually talk about the things I'm studying. I spent last week researching MTM. And in my view suspension of MTM and the Uptick rule will help cause a false rally to continue. They are going on a offensive(gov and banks) by cooking the books to give false data that its not as bad as it seems. On paper things will start to look good, thus tricking people, only for it to crash again because the fundamentals are bad.

[DavidAKZ]

So like government, banks are going to pick winners and losers as they really have no way of evaluating assets. If that sounds ridiculous then why did inter-bank lending freeze and the LIBOR rate rise to historic levels ?

[joelito101]

I'm getting a:

"We're sorry, this video is no longer available."

did you remove it or has it been removed for you?

[AwakenSafely]

no...just try back.  YouTube has a hard time serving these up sometimes.

[endlessmountain]

stuff like this isn't really my subject, but this is part of the change that is happening with the shift in consciousness.

We need to see money fall, so we are going to hear a lot, but banks have to get destroyed.

I want the President came out with a plan like "End the Banks by 2100"

That is progress for me... Go "Resource Based Economy" Go!

[hound2dog75]

to anyone say that jacob is a bad guy because he wanted to share a good day out with his famliy, come on guys everyone needs to see this everyone needs to have a day out and to share that with your internet friends is a great thing thank you for that. because of that video i went out and had a nicw day in the sun thank you again

[iamgabrielf]

The net is a great format, but I'm developing the sense that some comments on here should just be ignored. Nod and smile, Jacob. Just nod and smile.

[AwakenSafely]

*chuckle* ok...

[AwakenSafely]

also, Hound2dog...thanks for your kindness. I just need to grow a thicker skin at times :-)

[sc1100]

The real world, lol-they wouldn't last long there.

Good video.

Thanks.

[iamgabrielf]

GREAT GREAT GREAT TOPIC! This rule means that banks, or anyone, has to report losses BEFORE they lose the money. Historically, if an asset falls, you don't lose money until you sell it. This rules now makes you take the losses today. So as your company falls in value, the your insurance & interest rates rise, while credit rating falls.

Mark to mrkt applied to girlfriends is this: "Honey, I think you will cheat on me someday, so I'm going to cut off your wababa right now!"

[AwakenSafely]

hmmmm.......

so it sounds as if you disagree with the author of the article? (I'm not arguing with you, just want to be sure I understand your position)

If I understand this, you are saying that the companies basically have to "realize" a loss even though they haven't actually sold the security (...or, in other words, they haven't TAKEN the loss yet).

Is this accurate?

Seems like it's just more playing with numbers to me...

[iamgabrielf]

Yes and no. If banks make too many bad loans, they close. The ratios are complicated, but the jist is this. If the assets backing up the loans fall beneath a certain level, the bank must raise asset values, or pump cash into their system, or close. This system exists to make sure banks don't make too many bad loans.

But, mark to mrkt rule forces banks to record asset values lower than the initial value of the asset; even if there is no foreclosure. So they close even if the loans were good.

[iamgabrielf]

Also, mrk2mrkt makes banks riskier on paper. So their insurance (credit default swaps) rates go up. So a bank that is in trouble, but still viable may find itself under water because this rule is making them riskier to the people who insured their assets (call this bank A).

Furthermore, the banks who used bank A to guarantee their assets must now pay a higher interest rate on their insurance because their asset (bank A) is now riskier. It is a chain. One weaker banks, makes all banks weak.

[AwakenSafely]

so, from your perspective, mark-to-market is unfair to banks?

[chrisl8r]

iamgabrielf...You are somewhat correct in your thinking however you make the the wrong assumption that banks "lose" money with mark to market. In actuality banks lose the ability to leverage based on their previously valued assets....thus now they have to deal with the newly "devalued" assets and this does hurt their ability to both attract investors and renew confidence from govt entities (ie the fed reserve).

[chrisl8r]

In other words...your analogy should read: "Honey, I have confirmed suspicions you are cheating on me...so I'm cutting off your wababa now!"

[HHODork]

Good points and thanks for clearning this up for lots of people. We hear the talking heads talk about mark to market, but they dont tell us what it is.

[veritasfiles]

I think you should do the videos you want. This is your channel, and someone not liking one of your videos as much as they like the others shouldn't be too big of a deal. In any case, I don't know or undrestand much about Mark to Market, but I've heard it mentioned a lot. I'm looking forward to hearing more about it if you get the time. Good video though.

[AwakenSafely]

for sure, but I enjoy being grouchy about the detractors :-) thanks for this comment, too.

I will do my best to learn more about "mark to market" and bring you more. Stay tuned to the further comments from other viewers, too. I believe there will be some great education in them.

regards,

Jacob

[optiontrader11]

It will not change anything. The only thing it will change is that banks will be able to issue financial statements that are based on phony numbers. But the investors and people looking at them will know that the numbers on the financials are not real and will avoid investing in these banks because they will not know the extent of loses or impaired assets that the bank holds. Actually it will make it worse for them because no one will have confidence in them or their financials.

[wetalmorker]

ot11, Am I remembering a dream, or did not investment banks just come under MTM rules in early '08? That's about the same time that Merrill failed, right? If I am correct, MTM in high finance finally exposed the man behind the curtain, and the rest is, well, current events. Then again, I could easily be full of ...

[cosmosgato]

Funny I remeber when Enron MADE MONEY from mark to market accounting. This allowed them to show profit from sells THAT DID NOT AND IN FACT COULD NOT occur. For example building a power plant to sell electricity to people in India that didn't have any money.

Bottom line this is an over correcting bust from the last boom thus setting up the next boom. Soon someone will invent dry water at least on paper and eveything will be great. For a while.

[AwakenSafely]

exactly!!!

[optiontrader11]

Mark to Market came into use because of Enron who used other Mickey Mouse accounting methods to value liabilities.

[wetalmorker]

"dry water", lol!

[AwakenSafely]

I'll get more. my lodge is at the top of a pretty tall hill, so it gets kind of socked in by clouds when the snow is flying. not much to see. Later I'll post some dazzling stuff when the skies are clear. wow!

[aw3212]

Lodge? C'mon now, nothing like sleeping in tent when it's snowing. I was up in the Rockies and it fell to 35 in August; well my bag was rated to 0 degrees - BS! I nearly froze. I guess those ratings are based on the bare minimum to keep you alive for 20 minutes or so.

Mark-to-market? BooHoo for them. What do they want the prices to reflect the peak years? I don't understand their arguments at all. Talk about lipstick on a pig!

BTW I enjoy the nature stuff too - keep it coming

[AwakenSafely]

chuckle..... yeah. I've had some miserable nights out in the wild, too.

I agree on your "boohoo for them" comment!

[wellingtonsc75]

I like the blah blah stuff. Too bad you didn't have any vid of the snow up in the mountains. Bummer.