Title: heh
Description: fickle market
no one in particular - March 10, 2009 08:41 PM (GMT)
The faint signs of hope came in several forms: a memorandum from Citigroup saying that the bank had been profitable in the first two months of the year;
http://www.nytimes.com/2009/03/11/business/11markets.html Dr. Gonzo - March 10, 2009 08:45 PM (GMT)
Too bad they don't include any write-downs in this report.
drixll - March 10, 2009 09:38 PM (GMT)
does this mean no more bullshit about 'wealth redistribution'?
Willieisdead - March 11, 2009 01:41 AM (GMT)
| QUOTE (Dr. Gonzo @ Mar 10 2009, 08:45 PM) |
| Too bad they don't include any write-downs in this report. |
Mark-to-Market blows
Space Monkey - March 13, 2009 02:39 PM (GMT)
| QUOTE (Willieisdead @ Mar 10 2009, 08:41 PM) |
| Mark-to-Market blows |
You mean accurately valuing the cash value of assets so that investors can be informed about the exact amount of liquidity a bank truly has? Yeah, that is a travesty.
If banks don't have to abide by mark to market, then neither should I when apply for a mortgage and have to state my stock holdings at their market value. I should get to pick a stock price in the past that more "accurately" reflects that stocks true value, and ignore what the market is saying it is worth currently. Makes sense......
Willieisdead - March 13, 2009 03:41 PM (GMT)
| QUOTE (Space Monkey @ Mar 13 2009, 02:39 PM) |
You mean accurately valuing the cash value of assets so that investors can be informed about the exact amount of liquidity a bank truly has? Yeah, that is a travesty.
If banks don't have to abide by mark to market, then neither should I when apply for a mortgage and have to state my stock holdings at their market value. I should get to pick a stock price in the past that more "accurately" reflects that stocks true value, and ignore what the market is saying it is worth currently. Makes sense...... |
Market value only matters when you sell the asset. What good does it do the bank to value a performing loan at current market prices when the owner is sitting in it and not going to move anytime soon?
I understand the concept but as a practical matter it's just crazy.
Space Monkey - March 13, 2009 03:50 PM (GMT)
| QUOTE (Willieisdead @ Mar 13 2009, 10:41 AM) |
| QUOTE (Space Monkey @ Mar 13 2009, 02:39 PM) | You mean accurately valuing the cash value of assets so that investors can be informed about the exact amount of liquidity a bank truly has? Yeah, that is a travesty.
If banks don't have to abide by mark to market, then neither should I when apply for a mortgage and have to state my stock holdings at their market value. I should get to pick a stock price in the past that more "accurately" reflects that stocks true value, and ignore what the market is saying it is worth currently. Makes sense...... |
Market value only matters when you sell the asset. What good does it do the bank to value a performing loan at current market prices when the owner is sitting in it and not going to move anytime soon?
I understand the concept but as a practical matter it's just crazy.
|
Banks sell assets regardless of whether the owner is moving or not. The issue is, how well capitalized is the bank, ie if the bank had an immediate need for cash, what amount could it get by selling its assets? A performing loan valued on a held to maturity basis means that the monthly payments are the amount readily liquid capital, not the full loan value.
Mark to market accurately shows the amount of cash a bank could get for its assets currently. Any artificial distortion of the immediate liquid value of the assets puts investors and the bank itself at risk of becoming undercapitalized without anyone realizing.
As a practical matter it is crazy to value assets that serve as capital at any value other than their liquidable value.
Space Monkey - March 13, 2009 03:52 PM (GMT)
| QUOTE |
| What good does it do the bank to value a performing loan at current market prices |
Accurate reflection of the banks capitalization. Banks have been failing, it is a terrible idea to elminate the practice which allows people to see the failure coming.
Pats&Sox - March 14, 2009 01:28 AM (GMT)
| QUOTE (Dr. Gonzo @ Mar 10 2009, 01:45 PM) |
| Too bad they don't include any write-downs in this report. |
All of a sudden, facts are suppose to overrule emotion, right Gonzo? We've been tanking on fear for awhile, time for an uptick.