[Rhodes22-list] Accounting

[Brad Haslett]

Wally,

All BS statements, er, balance sheets are based on informed
assumptions (otherwise known as guestimates) and you raise a valid
question. What is the true value?  I'm guessing that if you took all
the bad mortgages, discounted them by some percentage for the
properties being overpriced at the time the mortgages were made (say
25%) and further discounted them for those that aren't performing (say
another 10%) you'd be in the ballpark of their true value. The 700
Billion plan would have basically cleansed the banks of their now
"worthless" securities because their is no longer a market for them,
and taxpayers would have recouped their money when the market absorbed
the very real, real estate.  I think we could have made money on the
deal.  If you took my best guess, market all the mortgages down 35%
and left them on the banks books as assets, poof, they are suddenly
solvent (and still punished for their bad behavior).

It will take a czar of some sorts to make this happen.  As was
demonstrated on Monday, the Congress is dysfunctional and there's good
reason their approval rating is 9%.

My 2 cents worth, which just saved us $699,999,999,999.98.

Brad

On Wed, Oct 1, 2008 at 8:10 AM, TN Rhodey <tnrhodey at gmail.com> wrote:
> "A sharp CPA could design a believable computer
> model that could make the value come out wherever his boss wanted it
> to be. He could also convince outside auditors and regulators of the
> soundness of his model. "
>
> Brad, I am with you but wondering how they determine new (long term) value
> for this big pile of crap?  One thing the article mentions that often gets
> lost. Most people are paying their mortgages. The properties that are
> bundled in these securities are not worthless. At some point they all will
> be worth something to somebody.... but when?
>
> Are there computer models that accountants trust? Not poking a stick I have
> no idea. I can see how it would ease credit. I also see how it led to past
> problems.
>
>  I thought we were rushing into the bail out. I am all for any plain that
> reduces government intervention.
>
> Wally
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