04 March 2011

Honesty in Banking; The Lack Thereof

This piece by Jonathan Weil is quite interesting in detailing some insight into honesty in banking (or if you are like me, what you believe to be the lack thereof).  

The biggest thing we should take away from this article?  Simple.  More banks were reporting revised financial statements in the years preceding the finance meltdown than they have in the last year or two. 

I don't know about you, but to me if things aren't getting better (without the fictions flotation of the Federal Reserve's POMO printing and pumping), wouldn't we see more banks revising earnings statements and not less?  Unless, as Weil speculates, things like Sarbanes-Oxley caused institutions to clean up their internal controls and financial statements before the cash (and thus contributing to it), it might make some sense.  This individual still isn't buying the smell however. 

The simple man looks for the simple explanation.  Or, even when dealing with complex issues, a prudent smart man should apply Occam's razor and look for the simplest solution, and even more so when the situation is complex and multifaceted.  That said, there are too many variables to truly know whether or not banks and financial institutions have been properly recording earnings through the muddy waters of the current Great Recession.  But just looking at the sheer numbers (lack thereof must be my favorite words today), one would think that as this recession wears on, and companies "come clean" to their investors, we would see those numbers rise to attest to some level of reliability in the financial reporting.

Until these things occur with enough saturation, banks and other companies will continue to carry their investments at mark to fiction.  Even as an accountant who is supposed to play that game, something is very morally wrong with the basis of this story. 

QOTD Double Bonus: Caution: Democarcy Working at Fail!

From Zero Hedge (of course):
If this is the way politics in America will be done going forward, when any party knows the only way to prevent passage of austere financial measures is by fleeing, one wonders: just what is the point of the US "democratic" system when a minority can hold up the majority just by taking the first one way taxpayer funded private jet out of the state?
 I don't think that needs any further statement.

QOTD: Living at the Expense of the State

From Frederic Bastiat:
Everyone wants to live at the expense of the state.  They forget that the state wants to live at the expense of everyone.
The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.
Presented by itself for effect.  Thanks to the Mogambo Guru over at the Daily Reckoning.

Slice of Life: Negativity vs Realist

My wife is constantly telling me "You're Mr. Negative!"  She is partially right in that I do tend to dwell on negative news.

Stock markets have been melting up (and then jitter worse than a June-bug lately with all the turmoil in recent days) only to meltdown.  Gas prices are surging.  The Maryland legislature has been pushing more anti-gun legislation along with backward thinking gas and liquor tax hikes.  Obama is still our President and Congress can't do anything but bicker about cutting the largest deficit in a single year known to man.  So on and so forth, you get the idea that right now there is just not a whole lot of good to look at in the world.

With that having been said, I have not had the motivation to write lately.

Circling back to the thread title I have to ask, how do we measure the outlook upon the country and the world in terms associated with geopolitical and economical stresses and uncertainties?  The headlines that have been amassed by the riots of last month in Tunisia, Egypt, Libya, and Bahrain, along with the Bolshevik style protests in Wisconsin over public sector unions, and the budget discussions in Washington are not the things that paint pretty mosaic pictures.  Quite the contrary; they flat out suck!  If we as individuals who follow worldly events and pay homage to individual freedom contemplate the events themselves and not necessarily the meanings behind them, what conclusions should we draw?

Protesters in foreign lands fighting their oppressors is very important and while it is not negative in nature per sé, it certainly speaks to a realm of potential death, destruction, and economic upheaval.  In Wisconsin, we see the same thing as the entrenched political machine is tooth and nail to prevent a systemic change that will start an unraveling in the status quo.  Of course, Washington is no different as the House pushes to cut some 100 billion spending (which is still less than 1% of the total Federal budget, yikes).

So where does all of this leave us?  Where does it leave our psyche?  Should we all dwell on SHTF or should we prep to the world's end?  Or perhaps we need to just say F'it, let's Quit Our Jobs and Move to Key West.  (While I don't advocate directly for the last one in that option string, I would certainly prefer it).  But, I digress, and in my long winded nature I have yet to make any points.

Thanks to FerFAL, he pretty much achieved what took me 3 months to finally pen out.  He discusses the practical need to be prepared for our worlds to be turned upside down but we can't completely forget that life is just that, life, and as such it always goes on.  Sometimes life moves with us, sometimes without us, and the best we can hope for is to be in it.

Often when asked by coworkers or friends "how are you?" I respond with "alive."  I think that it is important for us to remind ourselves sometimes that we are in deed, alive.  Considering that the alternative of death doesn't really affect positive changes upon the world, this is a good state of physiological normal.  While it would be nice to meet my maker of a natural phenomena (NO suicidal thoughts here as it goes against my spiritual beliefes), I am not ready to leave behind the things that I have in this world.  There are too many things to accomplish and too many people to protect (meaning, my wife and my family).  This means that while reviewing the news of the world, it is important to remain grounded.

As a libertarian and someone who believes in individual freedom, it is important that I (and my fellow libertarians) not loose sight of today's reality.  While we may not agree with the politics or religions of those in Egypt and other Middle East countries that have been perusing regime change, we should certainly admire them for the boldness of their initiatives, and their resolve.  It says a lot when impoverished citizens who have been enslaved by corrupt governments make strides to effect real change for their overall freedom.  I wish I could say the same for my country which has seen a cut and run strategy that has denied the citizen class the opportunity of a functional republican form of government.

Before rambling off into my return to blogging, I am going to leave this post written as a sort of mind teaser.  While I have certainly switched my feelings about our country on a day to day basis since first broaching the post title last November, my long term outlook has been of a downward trend.  Unfortunately, as semi-outlined above, that trend seems to agree with reality.  So dear reader, is being negative synonymous with being a realist? 

I would love to be proved wrong of course, but something tells me this summer is going to be hotter than the 60s and 70s combined.