The Obama Adminstration's Handling of Wall Street.

I don't think you know what the topic of this thread is specifically dealing with...

That's looks like an international effort---nowhere do I see the Obama Administration putting too much emphasis on it, or meriting special mention...other then possibly "Some countries have objected to an earlier formal proposal that would have imposed even higher surcharges." I mean, I guess it's nice, but it doesn't exactly reinforce the notion that the Obama Admin. is engaged in action on these items.

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Yes, but I'd rather prefer GAAP, the system I'm most familiar with, even if others say it actually lends itself to manipulation in the other direction---by trying to applying the principle of conservatism, and therefore even overstating possible losses, and understating possible gains. IFRS lends itself to aggressive accounting tactics that can completely ignore certain expenses, and conjure revenues. Between the two, you can obviously see which one would benefit banks and corporations more. Between the two, you could also see which makes more sense if you point blank, don't trust the ethics of big banks. Which I clearly don't.

Now, GAAP has its' faults, but by and large, it is in mind, in principle, the better system. Yes, crap like Enron happened---if you're a f**king criminal just faking numbers, anything can be manipulated. However, in general, GAAP tends to be more conservative, while IFRS tends to be more aggressive. Canadian GAAP is notoriously stringy, and our banks are notoriously boring and conservative---and look what's happened to us. I'm not saying Canada is in an ideal shape, but it's in much better shape than America or Europe because, even though Canadian GAAP has it's faults, one of its' strengths is that it is harder to play with. It represents the "better safe than sorry approach" I think the Obama Administration should have when it comes to Wall Street.

Does that mean if we embrace accounting conservatism there will be no problems, ever? No. In the long run, however, I believe there will be less problems. Which is the whole damn point of advocating policy. We don't live in a perfect world. However, we must ideally choose the best way to live in it.

"This product is great"

*sell man car with bomb inside*

=countless Goldman emails

that's not illegal now (though it might be under state laws), but it should be.

the onus of disclosure of moral hazard is on the salesman, point blank. If you want to cry caveat emptor, so be it, but that is not how the law works in most situations. Securities are one of the only things you can get away with in terms of that ambiguity, if you're selling poisoned lead toys, or shoddy products, you better bet your ass the federal government will be on you and hold you criminally responsible if you knew they were poisoned or shoddy. You don't turn around and tell consumers "caveat emptor". In this case, you could argue that consumers are more sophisticated and should know more about what they are buying, but the law of moral hazard has always been to rein in the side that has informational advantage, and in this case Goldman has it.

I just want the civil cases to become criminal ones. The difference between the two and the hoops you have to run around to prove intent are absolutely bewildering. Short of wiretap evidence (which they had on the one conviction case, if memory serves), you just can't do it. So you're stuck with a bunch of people that have done wrong, you just can't punish them right. slap them with a fee, they earn it back in no time. jail time? another story (hopefully?).

I am curious, what is your opinion of IMF bailouts then?

 

The thing is though, you can't really credit the Obama Administration over this, at least not directly, without knowing more about the role they played. We know that nominally, the United States supports this (otherwise it probably would not even be on the table)---but then again, things look kinda iffy right now.

also---indications that the United States might not be pulling for it totally...

^the latter sounding suspiciously like a caution against banking surcharges, in that nominally, they would slow the flow of credit, and lead to some GDP shrinkage.

 

None of us know who's pushing what. For all we know, the Obama Administration is the leader on this initiative, or it could be one of the countries holding back from even higher surcharges. My gut feeling tells me the United States and Britain are fighting hard to maintain it at 3 percent, and not even higher, while militant countries like France (Sarkozy is probably the most anti-banking leader out there) are holding for higher surcharges, but looking to protect domestic institutions like Societe Generale.

http://www.bloomberg.com/news/2011-...oint-capital-surcharge-for-largest-banks.html

still, we fall into the same trap we did with the Goldman case---namely that we are fighting over a very small slice of the pie that is revealed to the public. you accuse me of theoretically extrapolating America's role in this negotiation, while you proceed to do the same by saying America is central just because nothing happens at Basel without American oversight, and therefore it must be pushing for surcharges. What is to say that America was not the end-all, be-all on this, or that America fought hard for the 3% because they knew other countries wanted higher (as suggested by your article). None of us know, because none of us were at the negotiation.

that said, circumstantial evidence can be used to pull my view, and yours. Geithner's quotes provide some insight into what the American position might be (notably a warning against "excessive surcharges") But do not pretend that your theories have any more basis in solid fact than mine, unless you can prove to me that you, or a credible source were there, and can back up your projections.

my gut says this isn't the case. this looks more like "change" masquerading---just like Frank-Dodd, which was pretty much a watered down Glass-Stegall with a few crucial differences that may end up killing us.

 

Look, Rockets Pride, this is the wrong topic within which to debate this---and also, I doubt very much if you know the difference between micro or macro economics, never mind the potential flaws of using these unemployment numbers, the Keynesian vs Austrian School approach to this problem, or the Phillips curve and how this relates to the problem---

if I am wrong, you may prove me wrong, but in another topic. In fact, I see you pretty much veering every topic to this "Obama economy bad!" crap, even if it's not remotely related, so maybe, in the interests of this thread and other threads, I would suggest you create a new thread where you can bring this issue to the forefront, in the manner you see fit, and me and others could debate you properly there.

 

They don't have to make it secret. They are, as you alluded to, a public company.

http://www2.goldmansachs.com/ideas/global-markets-institute/index.html

The Global Markets Institute at Goldman Sachs provides research and high-level advisory services to policymakers, regulators and investors around the world.

Trustees of the Brookings Institute

I take it you'll ignore this, since if the Koch brothers can be all sinister operating think tanks and trying to influence policy decisions, what does it tell you that Goldman does the same and *gasp* they've worked together? that sinister Koch conspiracy of yours either falls, or you admit that Goldman might be up to something sinister as well.

You say they are my "vapid conspiracy theories" yet you ignore the IMF's role in Asia, and now Europe, Rubin's bailing out of the banks in the 90s sacrificing everything for investors, and the incredible amount of power he and Geithner wield with their extensive links to the banks, the amazing amount of private turnover in the Obama Administration and entrenchment of the Goldman perspective (to the point where Stiglitz, in his capacity as head of the Council of Economic Advisors, thought Rubin had successfully blocked him from reaching the President's ear with very valid complaints and fears about deregulation), especially among a lax enforcement agency that is still cited as being grossly incompetent, the ridiculous handling of TARP that even its' own overseer admitted failed most Main Street goals, the failures of Frank-Dodd, and how this watered-down Glass-Stegall fails to protect Americans, the Wachovia case and how the DOJ failed miserably at a proper prosecution there (with internal whistle-blowers too!), why the state of New York is more zealous and public to persecute Goldman now and etc.

 

Ok, let me make it clear.

When I refer to GAAP, I am largely referring to Canadian GAAP, as I have alluded to. You show a tendency to not read and assume I am an idiot as a result, which is incredibly frustrating.

SO, to set the record straight, Canadian standards are set by the AcSB, or the CNC, because, on a toujours besoin de satisfaire les Québécois, so we have an English and a French version. Hoorah.

So to me, you talking about FASB is irrelevant. I am positing Canadian GAAP as an ideal, not American GAAP.

Yes, GAAP simply refers to what the set of rules or principles are at the time. I thought I made it clear I was referring to Canadian GAAP, which has subtle differences between those set by the FASB. I apologize if I misled you. If you must continue to be an ass about it, I also have to point out that as of now, GAAP is NOT IFRS. Okay, yes it is technically, since in Canada the shift happened in 2011---however, and get this straight, when I say GAAP, I am referring to the set of standards set by the AcSB before January, 1, 2011, which is much more rules-oriented than IFRS, and which is commonly referred to, historically, as Canadian GAAP. ok? I am aware you are not an expert in the field, so I won't condescend and assume you are an idiot, just that you don't know anything about this particular set of accounting rules, which is perfectly normal.

NOW, the reason why I brought it up---rules-based vs principles based. OK, let's get this straight. Canadian GAAP used to be one of the most stringent systems out there in terms of rules. and *******, it was followed. Canadian GAAP had many differences from those set by the FASB, namely an emphasis on conservatism and a stringent set of rules in many cases which were to be followed.

Yes, it lead to undervaluation of Canadian firms, but I don't exactly see Canada falling apart at the seams because of ethical violations, no?

So you posit China. I posit Canada, as an extension of the need for firm rules with tangible punishments so as to get rid of the ambiguity surrounding financial fraud.

Between the two, I'd say China makes for the worse comparison. That entire system is a choke-hold of political repression and corruption where 关系 or relationships matter more than business sense, so I'm not surprised if any accounting standard does not work for China. However, given a sensible comparison---Canada, a nominally free society where corruption and personal favors have been largely squashed out (though not entirely, but nowhere near the scourge that is Chinese business), one can see how a rules-based system makes sense in a COMPARABLE country.

dunno if you're referring to FASB standards, which I never thought were stringent enough anyways, but if you're referring to the international system, I can tell you off hand that IFRS has been the dominant system around the world, especially in Europe and Asia throughout the 90s and 00s.

anyways, what it boils down to (And why the shift to IFRS pisses me off) is that it---

basically, fair-value is an euphemism for disregarding conservatism, and trending towards overstating gains, and understating losses.

it's all linked too---

like hanging an apple before Adam and Eve.

 

Look, I said something off-hand about IFRS-s**ting or a familiarity with accounting standards, you started pouncing all over it, I am merely trying to tie it into the whole bloody affair. I'll give you the benefit of the doubt and say I started it, even though I know you love to argue just to argue.

ok, some disclosures. I could brow-beat you about it forever, but yes, the following admissions need to be made.

1-American GAAP is more rules-oriented than Canadian GAAP, especially since the implementation of S-O.
2-Canadian GAAP is actually more of a principles-oriented system than American GAAP, though it is more rules-based than IFRS.

In turn, that means the shift from American GAAP to IFRS is the greater one.

So what do I mean by stringent? I mean it in terms of classic adherence to a set of principles backed by a system that is still largely carried by rules. A hybrid, if you will...

Compared to IFRS, Canadian GAAP has been more rules-oriented by far. yes, American GAAP has its' faults, and is more stringent if you define that solely by the number of rules you have to adhere to and the strict limits set on interpretation. However, I would like to define my use of stringent as the following---a precise and strict adherence to the spirit of the principles and rules set out, and not just blindly setting and following rules. The Canadian firms and American subsidiaries (before you bring corporate size to the fore again)---

who reported under Canadian GAAP were EXTREMELY consistent in applying the principle of conservatism, for example, which is madly stressed upon in Canada.

As for rules vs principles...it's not black-and-white. Yes, America was more rules-based, and Europe/Asia were more principles-based than Canada. However, I don't believe that it was because of some miracle or polite Canadian genes that Canada was not as affected, or corporate size for that matter as you posited and I refuted. I think it has to do with a framework of strong principles that everyone adheres to+a set of rules to back that up and frame those principles---vs a system where no one really followed the principles and dogmatically tried to escape rules that were too strict (America) or a system where there were just loose principles and no rules (Europe+Asia). Your argument is just, "we're f**ked either way". I think not. I think a system where people were drilled to follow the principles and ethics, and framed by strict rules, is the best. IFRS just shot that to hell and back by making everything a principle and giving everything "fair value".

anyways, I was never arguing for a pure rules-based system...just that the more rules they are, and the more rules-oriented a system is, the better it would be. I dislike American GAAP...it may be more stringent if you want to define that as blindly setting the amount of rules, but from what I know of it, there is not enough of a consistent emphasis on following those rules or principles. I cannot tell you, after undergoing multiple accounting classes, how much emphasis was put on conservatism in the Canadian system. not that it matters anymore, since IFRS will shoot that to hell and back, but it was somewhat comforting then.

and no, by and large, fair value won't understate value. Conservatism was supposed to do that. Fair value simply removes the blinders and says...go forth and do whatever! Conservatism was a strict principle that stipulated you always chose the lower of two values. that's been scrapped now.

it's the old axiom of reliability vs relevance. yes, there are arguments that can go both ways, but by and large, if you don't trust the ethics of banks or companies as I do, then you hope to God for a system that emphasizes reliability of data. IFRS doesn't.

Here, case study---historical cost vs market value.

In Canadian GAAP, that means conservatism, which means ALWAYS choosing historical cost. In IFRS, that means choosing market value.

however, how do you determine the market value?

is your market value reliable? what if your market value is directed by a CEO that has personal incentive checks cashing in at a certain company net income?

what if you end up with a streaming pile of crap that you way overvalued at the time, but once you sold it, now have to take huge losses, and basically screwed investors with faulty income figures just because your previous CEO just loving cashing bonuses, and left the company a real wreck, but a financial wonder?

etc.

IFRS in summation, is financed and supported by the big banks. To tie it into the thread (I seriously think I just mentioned it off-hand, and somehow you took that as a threat to your e-Penis, though I'm too lazy to pore through previous posts to confirm that), it would delineate a shift towards a set of principles that would make it easier for banks to commit ethical violations, and would reduce compliance costs. Given the lax enforcement the SEC has when it comes to strict rules, one shudders at the possibility of what it will do with ambiguous principles.

 

if the Koch brothers are so sinister, what makes Goldman that benign? they're doing the exact same crap. Goldman has its' own think tank and multiple hands in policy tank jars. If Koch funneling money to "right-wing" causes is sinister, what about this---

Yeah, the Koch brothers donate to museums and Goldman makes a f***ing 500 mill "donation" to small business. I guess they're so sinister.

now now, give me a f**king break. I HATE the Koch Brothers. you comparing Goldman to the Kochsters is laughable. I have bared with it, but I cannot help but think of this like a debate with one of the numerous Israel-bots that say "but look at what Palestine is doing!"...yes, I hate what Palestine does too, but that doesn't mean Israel should get away with s*** either. corruption isn't a game or a debate Sam, you don't get away with corruption because of the five-year old game of "but he did worse, mommy!"

However, you've indicated a desire to get out of the thread. cool. I will definitely not remind you the next time I go "full f**king r****d", since I guess all that happens is you sitting there, and ignoring valid points, and trying to claim some shred of dignity by leaving and saying "I refuse to address your points."

I don't think there is an Illuminati conspiracy.

I am however uncomfortable with the entrenchment of the banking industry in public policy and possible areas of corruption. If you refuse to acknowledge this, then you my friend, are the one who has gone full f**king r****d, to the point where no reasonable individual can speak with you.

In summation, have a good day, come back if you feel like you want to address other s***, otherwise, bye.