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Started By
Message
"Mark To Make Believe"
Posted on 3/2/09 at 6:41 pm
Posted on 3/2/09 at 6:41 pm
Great quote on mark to market! 
It is the title of an article written by a KPMG partner. It's in today's Philippines Star newspaper but it is not in the online edition yet.
He explains very clearly that MtM is not working in today's economic situation. Not only that, it's making the situation worse, just to please quant wonks (like him!).
See my sig quote also.
I have to leave for work now (it's about 8:40 AM here in Manila now) but I will try and link the column after work today.
It is the title of an article written by a KPMG partner. It's in today's Philippines Star newspaper but it is not in the online edition yet.
He explains very clearly that MtM is not working in today's economic situation. Not only that, it's making the situation worse, just to please quant wonks (like him!).
See my sig quote also.
I have to leave for work now (it's about 8:40 AM here in Manila now) but I will try and link the column after work today.
7
Posted on 3/2/09 at 6:52 pm to LSURussian
quote:
here in Manila
tigahrag calls bullshite.
ETA: link the article when you find it, I'll be interested to see what it says. Until now, "mark to myth" or "mark to make believe" has been used to refer to the stupidity of mark-to-model pricing. If he's associating it with mark-to-market, it'll be a first (albeit not shocking) redefinition of the joke.
This post was edited on 3/2/09 at 6:58 pm
Posted on 3/2/09 at 7:22 pm to LSURussian
So he is basically admitting his clients are insolvent, but he doesn't want to have their financial statements reflect that fact. Is he looking out for the interests of the users of the financial statements or his interests as a KPMG partner?
Posted on 3/3/09 at 12:17 am to Poodlebrain
quote:What clients? He doesn't mention any bank clients in his article. I'm surprised at your assumption.
So he is basically admitting his clients are insolvent
Posted on 3/3/09 at 12:20 am to Colonel Hapablap
quote:It's not in the online edition yet. He basically says what I've been saying: MtM doesn't work when the market is so phucked up as it is now. Even the provision for being able to use an estimate is meaningless. It's like asking someone to make you an offer on your house when it is engulfed in flames. If it shows up online, I'll put the link.
link the article when you find it
Posted on 3/3/09 at 1:19 am to LSURussian
quote:Is it because of reduced liquidity?
He explains very clearly that MtM is not working in today's economic situation.
Posted on 3/3/09 at 4:42 am to BurnKDoeBurn
quote:
Is it because of reduced liquidity?
No, it's because there is no functioning market for those types of tainted securities now.
Posted on 3/3/09 at 7:19 am to LSURussian
quote:
very clearly that MtM is not working
Just a hypothetical, if MtM were eliminated by the Fed gubment, what long term effect would that have on the market / recovery? Would such news justify re-investing in etfs?
Posted on 3/3/09 at 7:45 am to LSURussian
quote:
Even the provision for being able to use an estimate is meaningless
I agree with this, but I would submit that it was ALWAYS meaningless. I have to mark my portfolio every day if I'm on margin, they should have to as well.
Posted on 3/3/09 at 7:55 am to LSURussian
I think I understand the pros and cons of MtM, but there is one thing I still don't understand. If MtM is wrongly undervaluing the assets these banks are holding, why aren't there brave investors going in and buying them at a value higher than their mark? They certainly aren't required to pay the mark price.
Posted on 3/3/09 at 9:52 am to Parliament
This suggests that there is a market. Just sayin'
Posted on 3/3/09 at 10:01 am to LSURussian
quote:
No, it's because there is no functioning market for those types of tainted securities now.
Bull shite. there is a market for them. They just don't like the prices that are being offered.
Posted on 3/3/09 at 10:02 am to LSURussian
wtf are you doing in Manilla btw?
Posted on 3/3/09 at 10:03 am to kfizzle85
quote:
This suggests that there is a market. Just sayin'
That article goes over my head, but if there is an active market for distressed MBS's, that should be an argument for MtM.
I'm coming to believe most people who are against MtM still have their heads in the sand.
Posted on 3/3/09 at 10:05 am to Parliament
I think that's the case for most people (or they don't understand the rule to begin with, and its become a talking point). LSURussian does not fit that bill, IMO though.
Posted on 3/3/09 at 10:48 am to Parliament
'brave investors'??? What a ludicrous concept!
I have known brave investors but I don't know any old brave investors.
The banks obviously did not concern themselves with being brave. Banks knew in a worse case scenario they would be bailed out by tax payers.
Individual investors do not usually have the tax payers to bail them out should they do something stupid...like buy financial instruments that are marked to fantasy. Get real.
I have known brave investors but I don't know any old brave investors.
The banks obviously did not concern themselves with being brave. Banks knew in a worse case scenario they would be bailed out by tax payers.
Individual investors do not usually have the tax payers to bail them out should they do something stupid...like buy financial instruments that are marked to fantasy. Get real.
Posted on 3/4/09 at 10:49 am to LSURussian
bump - ever get that link?
Posted on 3/4/09 at 5:22 pm to Colonel Hapablap
Posted on 3/4/09 at 5:58 pm to LSURussian
I honestly didn't see anything additive about that article.
Posted on 3/4/09 at 6:34 pm to kfizzle85
Sorry to waste your time, sir.
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