Sean’s Rant

Take a look at the following charts. The first chart is one of the market crash of 1929 and the following recovery.

The next chart is the  market crash of 2008 and the recovery up until now.

So now companies have the same assets, but they will look different on the balance sheets of companies like banks with ‘distessed’ assets. The stock market has already discounted for these assets with their own valuation models so the fact that these changes will now be reflected on the actual balance sheets will not really change anything although it is good for a ‘pop’ today in the market. This change was expected to happen so this is not exactly a shock and might have a limited effect on the market considering how much time the market had to rally before this announcement.

Massive government interaction is definitely the most inefficient way to run a market. Instead of just detaching capital requirements from mark to market and allowing the banks to use mark to model for regulatory reasons and maintain mark to market for reporting, as mentioned by Karen Finerman on CNBC’s Fast Money mentioned as I had been wondering myself even before I heard from Karen the seemingly obvious alternative to the capital requirements problem.If the reason the assets need to be bought by the PIPP program is because the banks need more capital in order to lend, then change the system for capital requirements.

The new ‘idea’ being thrown around is to incentivise top management through stock options rather than cash in order to avoid risk taking. Its like everyone has forgotten Enron and the fact that the stock price was manipulated because that was their main form of incentive. We are apparently stuck in a feedbackless loop where we continue to do the same things over again even though they didn’t work last time.

Sorry to have burst the naivete bubble early, but it didnt take China outwardly denouncing the US currency as the worlds reserve currency to figure out that China is concerned about thier investment in US treasuries. Tim Geithner was pouring gas on the fire with his unncecessary and obvious public statement about China Manipulating their currency.

I like this article so much and I was right so early that I felt like I would give myself a chance tto rub it in. I originally posted this in July.

We’ll be seeing another short lived housing bubble from the further government sponsorship of homeownership.

Isn’t it enough that the government already gives a tax benefit to homeowners by giving deductions for home interest and property taxes, and essentially opening the deductions door to this group? (I am part of this group for this exact reason).