Mark-to-market
From iGeek
Dumb/democrat idea of increasing the volatility of assets held by banks, by marking their value to the last market sale.
|
- FAS-157 passed in 2007 by Democrats said that instead of valuing an asset on a low-volatility manner (pegging a value to a 3-5 year rolling average), all assets of a like kind must be pegged to the last market sale. (Mark that value to the last market sale).
- To those who don't understand economics, this sounds good: it's transparent, and instantaneous -- no one can hide what's happening. This was to try to compensate for Enron and other tricks of accounting -- but when it was passed, it was fought as being dangerous and injecting volatility into the market. Democrats don't listen.
- What this means is when the one bank is struggling and required to sell an asset that no one wants for $.10 on the $1.00, then every other bank must peg all their assets as having an immediate 90% drop in value too. This injects/magnified volatility into the market, since your value is swinging much faster (and stronger) than the dampening effect that a rolling average has.
🔗 More
| |
| |
🔗 Links
https://mises.org/library/separation-commercial-and-investment-banking-morgans-vs-rockefellers
Tags: Terms Financial Terms
