In The News Today

Posted at 12:15 PM (CST) by & filed under General Editorial.

Dear CIGAs,

Why is there even an FASB?

They are a bunch of bean counters that like two plus twp to be four. The earth cries out to its maker as the evil is too much to bear.

The common man is a slave.

The middle class is regulated.

The super rich have no regulation, law or feeling of responsibility except to themselves.

The damage they do will be vented on their children, but they do not give a damn.

Financial Sodom and Gomorrah:

“And the Lord said, Because the cry of Sodom and Gomorrah is great, and because their sin is very grievous;

I will go down now, and see whether they have done altogether according to the cry of it, which is come unto me; and if not, I will know.

— Genesis 18: 20-21 (KJV)”

Sometimes men just push too far.

That time the evildoers are the denizens of Sodom, a city on the plains of Jordan near the Dead Sea.

This time the evil doers are OTC derivative manufacturers and the false/misleading valuation of worthless asset-less so called assets.

Somehow I do not believe the cocky evil doers will walk away with their winnings, their health and live happily ever after in Greenwich CT and Toronto.

SEC allows change that may delay bank write-downs
Thu Oct 16, 2008 3:54pm EDT

NEW YORK/WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission has agreed to a request from banks that could allow them to delay writedowns on certain securities that have dropped in value due to thecredit crisis.

In a letter late on Tuesday, the chief accountant of the SEC told Financial Accounting Standards Board (FASB) Chairman Robert Herz, that banks, at least temporarily, could treat so-called perpetual preferred securities more like debt securities when assessing them for impairments.

In explaining the decision, SEC Chief Accountant Conrad Hewitt said such securities were “hybrid” securities with equity and debt-like characteristics that presented a particular challenge to banks.

In the letter, Hewitt said the SEC “would not object” to banks treating perpetual preferred securities as debt until FASB provides clearer guidance on how to address impairment charges for these securities.

A FASB spokesman was not immediately available to comment.


Jim Sinclair’s Commentary

When one party in a special performance contract fails financially the OTC derivative moves from notional value to full value. I don’t believe there are 200 experts that know their ass from their elbow on how to settle this mess.

Lehman Looks to Unwind Derivatives Trades
LEHMAN bankruptcy attorneys sorting thru 1.5 mil derivatives trades involving 8,000 counter-parties.

Lehman Brothers Holdings Inc.’s legal and financial advisers said Thursday they plan to hire about 200 professionals to help settle the more than 1 million derivatives trades the investment bank entered into before it collapsed last month.

Lehman attorney Harvey Miller said at a court hearing that advisers are working around the clock to understand Lehman’s transactions in the wake of the “chaos” that resulted from its Sept. 15 bankruptcy filing, the largest ever in U.S. history.

Much of their work will focus on wading through about 1.5 million derivatives trades involving 8,000 counterparties. Lehman’s chief restructuring officer Bryan Marsal of turnaround firm Alvarez & Marsal said about 210 financial professionals will be hired to unwind those trades.

Mr. Miller credited Mr. Marsal for his work so far, saying he has “brought order to thi s chaos.” Alvarez & Marsal has 144 employees working on the Lehman matter along with 165 Lehman employees still working at the bank.


Will Bailouts Risk Hyperinflation?
By | 13 Oct 2008 | 06:07 AM ET

Government bailouts of the financial system will destroy the dollar, euro and sterling because of hyperinflation, Martin Hennecke, senior manager of private clients at Tyche told CNBC. But Todd Everts, president & CEO of Wall Street Global, disagreed.

“The privatization of the banks is the first step down the road to hyperinflation,” Hennecke said Monday. “Maybe we are not seeing the Zimbabwe-style (hyperinflation), but inflation is a major major risk and investors should look at this very carefully.”

Standard and Poor’s projected in 2005, well before the current crisis hit, that all the major Western governments would be heading towards default on their sovereign bonds, Hennecke said.

But the dollar’s value is set to decrease over time, argued Everts, after hearing Hennecke’s case.