Wall Street became as giddy as a school girl today. Not over any diplomatic coup or sweeping agreement to save the world economy but by a ruling from an obscure government board. The Federal Accounting Standards Board (FASB) basically did away with reality; without that pesky reality gumming up the works Wall Street can resume doing what it does best: pushing a lot of paper around and proclaiming that they are the Masters of the Universe and that they are rich, rich, rich! And how do we know that they are? Because they’ve got it all down on paper.
What the FASB did under pressure from Congress was to eliminate the Mark to Market Rule from accounting. This is (rather was) such a fundamental concept that you would not think there needed to be a rule, but what it said was: that any marketable asset held by a bank on its books had to be valued at the market price. Now that this reality has been done away with; nay, not just done away with but dragged from its abode and killed. It’s home burned, livestock slaughtered, well poisoned, the fields salted and the very speaking of its name banned for all time... err, I digress. Companies are now free to value their toxic assets at any price they so choose. Reality be damned!
This will tank any effort by the Treasury Dept. to sell off these toxic assets since they are now very valuable toxic assets as long as they stay on the books. It’s going to be business as usual and reality matters not. None of this "making of things to create wealth" or even balancing the books. We don’t have to, we are the Masters of the Universe and we are rich, rich, rich! This might have something to do with why the top three banks in the world are now owned by Red China.