Financial companies often hold bonds from issue to maturity. Traditionally, to keep market manipulators from shredding their books, accountants had always carried these securities at cost, not adjusting for interim price swings. That’s appropriate. In a well-run insurance operation, for example, amounts recorded this way make actuarial assumptions possible, rendering market gyrations a sideshow, having nothing to do with anything really, as nature intended.
For the Apocalypse however, short-sellers got our scribes to throw all that out, forcing the financial sector to mark bonds to market quotes gamed by short-sellers. An appropriate principle sheltering balance sheets from bear attack was dropped, driving an already precipitous crash into the murky abyss we probed during the Godless years of 2008 and 2009.
Thanks to fractious deregulation, investors had no chance to see it coming.
Pencil-pushers have been herded back to reality since then, dumping the bond “mark-to-market” shinola into the trash bin of history, but unfortunately not in time to stop investors from losing a bundle on financials in the horrific final demolition caused by massive short-selling that the Securities and Excuses Commission tells us wasn’t caused by massive short-selling.
If not, it was a bottomless pit needlessly carved out by bookkeeping demon spawn in some kind of undisclosed satanic SEC lair our own CPA had not been told of before.
Today, one hears here and there that persons of interest are scheming to bring “mark-to-market” devastation back again, and, as we interpret a recent Bloomberg TV heads-up, even got the SEC to investigate Warren Buffett over the issue.
The Oracle of Omaha had to face the holocaust head on himself, running a company with major holdings in the financial arena, then bottom fishing for more at the absolute nadir. The SEC wanted to know why his Berkshire Hathaway carried common stocks at cost that he’d bought kind of high back in the glory days, values now above current market prices.
Under standard accounting procedure, common stocks have always been marked to current, what I’ll call, “free market” prices, but what about the gamed market conditions we now have to live with? Gurus at The MacDougal Post have been wondering whether it isn’t time to start valuing all securities at cost, given the huge increase in hedge fund assets earlier this century, pouring Godzillions into a broken short-selling based business model that's hell bent on the ruination of fair market principles through coordinated mass manipulation to a degree Mother Capitalism never anticipated, let alone encountered before.
These short-selling vehicles are the playthings of careless people retreating into their vast carelessness, to shamelessly butcher F. Scott Fitzgerald in a time and place where his niche grasp is sorely needed. A rotten crowd. Our readers are worth the whole damn bunch put together. With the super careless now holding 75% of the nation’s wealth, up from 35% just a piddling time ago and still growing, it’s terrifying to contemplate where the new high-speed computerized stock market pricing mechanism could be flash crashing us to. If you and I have to indulge the vastness of this careless bear participation, perhaps ignoring their interim impact on everyone’s reported financial position is the only way to go.
Kudos to the Oracle for dropping this segue in our laptop.
Bloomberg didn’t say how the Buffett inquiry turned out, but to paraphrase their talking head, the country’s leading investor oracled that he was in his stocks for the long haul, believing Kraft and whatever to be great companies, and Berkshire wouldn’t be selling them here, hence had no inclination to price them here either.
God on High, praise be Warren Buffett.
In the earliest days of accounts keeping, when crooks were crooks and half of them got nabbed skulking around in Government positions, books were maintained at transaction values. The true historical record was the only thing stopping the felonious from running paper swindles. We may well be back there again.
One wishes the accounting profession would apply Mr. Buffett’s well-reasoned approach to our reported financial position too, helping insulate all long term investors from ursine maulings. Pricing assets with stock quotes that mobsters control is madness, and that’s what you find at every short-selling crime scene, be it a marketplace, sector, industry, or just one gangbanged issue on a particularly careless afternoon.
Remember, during the Apocalypse it was short-sellers who stuffed their own pockets at what became, in fact, all mankind’s expense, creating fraudulent paper for mass distribution and betting against clients buying it, then exacerbating the widespread human suffering that this caused with a mark-to-market scam misrepresenting the financials of public companies. Viewed in the context of their catastrophic global bloodletting, these are thrill killers, serial murderers seeking out the countless deaths they cause as well as all the collateral illness, homelessness, poverty, and despair still menacing God’s children in the misbegotten misery and hopelessness that continues, by their hand, to smother the civilized world and Iceland to this day.
Furthermore, who got the SEC to make the Buffett inquiry anyway, and how much time do our regulatory hotshots spend doing the short-seller’s bidding?
Why can’t we put this ridiculous agency down. Clearly, the small investor would be better off without it.
Just hearing about that rotten crowd at play is a damn waste of time.
