Biggest Economic Decision in a century in the next hour.

ninebeanrows

The House will vote on the bail-out deal in the next 30 to 60 minutes.

Whichever decision is made it will have major repercussions for all of us, even if the bill is passed the economic future is bleak but a breakdown of this bill will lead to a Stock Market crash in the states.

Here's a Live link to the House;

http://www.c-span.org/Watch/C-SPAN_wm.aspx

Personally i believe that this bill will just postpone the inevitable for a few months, however if the bill fails to be passed this economic crisis will affect all of us in a much more striking way in the coming days.

gurramok

Why will and how will a huge bill for American taxpayers be bleak for us in Euroland having 'major repercussions' and a stock market crash?

Are you indicating their economy will go into recession to pay for the $700bn, please explain

quarryman

Nay vote!

ninebeanrows

HOLY ****

cormie

gurramok wrote: »

Why will and how will a huge bill for American taxpayers be bleak for us in Euroland having 'major repercussions' and a stock market crash?

Are you indicating their economy will go into recession to pay for the $700bn, please explain

Yeah I think we need a simple dumbed down explanation for the ignorant among us (me).

cormie

I can hear people laughing in the stream so that must be good :pac:

cregser

Not that it really matters since it's a no vote, but can somebody clear this up for me?

To me 1 billion = 1,000 million.
In America AFAIK, 1 billion = 100 million.

So the $700bn that the U.S. talk about is $70bn/€48bn to us???

Edit: According to this (http://en.wikipedia.org/wiki/Billion) I'm off by a few zeros!

Économiste Monétaire

$700 billion is the same over here...

$700 bn = 700,000,000,000.00. There's no difference in zeros, whether it's here or the U.S.

mike65

We fupped they've said no! DJ is dropping like a stone.

Mike

failsafe

Fantastic! (I think?). But my portfolio is crying.

mike65

DJ is up and down like a hoares draws in the last few mins, buy buy buy!

Mike

askU

House leaders scramble for support for controversial Wall Street plan.

The fate of a controversial $700 billion financial bailout plan was in doubt Monday as a House vote turned against it.The next steps were not immediately clear but supporters were scrambling to put it up for another vote.
What was supposed to be a 15-minute vote stretched past the half-hour mark as leadership scrambled for support. Investors who had been counting on the rescue plan sent the Dow Jones industrial average down as much as 700 points while watching the measure come up short of the necessary support, before rebounding slightly. The key stock reading was down more than 500 points.
The measure needs 218 votes for passage. Democrats voted 141 to 94 in favor of the plan, while Republicans voted 65 to 133 against. That left the measure with 206 votes for and 227 against.
A four-hour debate included impassioned pleas for and against the measure from Democrats and Republicans alike. Even some of those arguing the legislation must be approved were quick to point out problems with it.
But in the end, the vote began with both Democratic and Republican leadership telling their members the only way to protect the economy from a spreading credit crunch was to vote for the difficult to swallow measure.
"Our time has run out," said Rep. Spencer Bachus, the ranking Republican on the House Financial Services Committee. "We're going make a decision. There are no other choices, no other alternatives."
The vote comes after lawmakers and the Bush administration finalized legislation following a weekend of high-stakes negotiations over the controversial measure, which is designed to get battered U.S. credit markets working normally again.
"Today is the decision day," said Barney Frank, D-Mass., on the House floor. "If we defeat this bill today, it will be a very bad day for the financial sector of the American economy and the people who will feel the pain are not the top bankers and top corporate executives but average Americans."
House Minority Leader John Boehner told his members, many of whom objected the measure, that the had accept something he and many of them found distasteful.
"If I didn't think we were on the brink of an economic disaster it would be the easiest thing to say no to this," Boehner said. But he said lawmakers needed to do what was in the best interest of the country.
Leading House Republicans signed on to the proposal on Sunday after expressing earlier reservations. Senate Majority Leader Harry Reid said Sunday he hoped for a vote in that chamber by Wednesday at the latest.
Earlier on Monday, President Bush and Federal Reserve Chairman Ben Bernanke hailed the measure and urged Congress to move quickly to pass it.
Bush, speaking at the White House, called the proposed measure "an extraordinary agreement to deal with an extraordinary problem." He said he is confident the measure will win bipartisan support.
"With this strong and decisive legislation, we will help restart the flow of credit so American families can meet their daily needs and American businesses can make purchases, ship goods and meet their payrolls," Bush said.
Bush acknowledged that many voters were opposed to helping out Wall Street with tax dollars, but said there is little choice to move forward with the plan. He said most if not all of the tax money spent to buy distressed mortgage-backed securities should be recouped when the Treasury sells them in the coming years.
"Every member of Congress and every American should keep in mind - a vote for this bill is a vote to prevent economic damage to you and your community," Bush said.
Bernanke, who had spent hours before Congress last week testifying in favor of the measure, issued a brief statement promising that it would restore the flow of credit to households and businesses. "I look forward to swift passage of the legislation," he said.
Buying troubled assets
The core of the bill is based on Treasury Secretary Henry Paulson's request for authority to purchase troubled assets from financial institutions so banks can resume lending and so the credit markets, now virtually frozen, can begin to operate more normally.
But Democrats and Republicans - concerned about the potential cost - have added several conditions and restrictions to protect taxpayers on the down side and give them a chance at some of the potential upside if the companies benefit from the plan.
Key negotiators for the financial rescue plan were e busy trying to line up votes on Capitol Hill on Sunday. House Majority Leader Steny Hoyer, D-Md., told CNN he believes a majority of representatives on both sides of the aisle can and will support the bill.
On Sunday evening, the House Republican working group, which stringently opposed earlier drafts of the plan and offered a counterproposal, indicated it would support the bill, and its members are encouraging other Republicans in the House to do the same.
"Nobody wants to have to support this bill, but it's a bill that we believe will avert the crisis that's out there," House Minority Leader John Boehner, R-Ohio, told reporters.
But the bill did draw some opposition during the morning debate.
Rep. John Culberson, R-Texas, said the measure would leave a huge burden on taxpayers. "This legislation is giving us a choice between bankrupting our children and bankrupting a few of these big financial institutions on Wall Street that made bad decisions," he said.
Other conservative Republicans argued the bill would be a blow against economic freedom.
Thaddeus McCotter, R-Mich., said the bill posed a choice between the loss of prosperity in the short term or economic freedom in the long term. He said once the federal government enters the financial market place, it will not leave. "The choice is stark," he said.
But there were also Democrats who opposed the bill for not doing enough to help those who taxpayers facing foreclosure or needing unemployment benefits extended, or taxing Wall Street to pay for the rescue package.
"Like the Iraq war and patriot act, this bill is fueled by fear and haste," said Lloyd Doggett, D-Texas.
The crisis and a proposed fix
Banks and Wall Street firms, worried about both their own needs for cash and the condition of other institutions, essentially stopped loaning money to one another in recent weeks. That choked off the money being made available on Main Street in the form of mortgage loans, business loans and other consumer borrowing.
The crisis stems from problems in mortgage-backed securities, which saw their value plunge as home prices have gone into their worst slide since the Great Depression and foreclosures have soared to record levels. In turn, the market for trillion of dollars worth of those securities held by major firms evaporated, sending them down to fire sale prices and raising the risk of widespread failures among the nation's major financial firms.
Under the plan, Treasury will buy the mortgage backed securities, either directly from the firms or through an auction process. It may also arrange to provide guarantees for the securities up to their original values in return for premiums they would charge current holders of the securities.
To make the legislation more politically palatable, the bill calls for the government, as an owner of a large number of mortgage securities, to exert influence on loan servicers to modify more troubled loans to help prevent additional foreclosures. It also provides that the government will take equity in the firms that sell the securities to the government, and limits pay packages for top executives.
The legislation comes amid great upheaval in the nation's financial system. On Monday morning, the Federal Deposit Insurance Corp., which insures deposits at failed banks, arranged for the sale of the banking assets of Wachovia (WB, Fortune 500), the nation's No. 4 bank holding company, to Citigroup (C, Fortune 500) for $2.2 billion in stock.
That follows three weeks of other shocks: the Treasury Department's seizure of mortgage finance firms Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500); Wall Street firm Lehman Brothers' bankruptcy filing; rival Merrill Lynch (MER, Fortune 500) purchase by Bank of America (BAC, Fortune 500).
In addition, the Fed bailed out insurance giant American International Group (AIG, Fortune 500), loaning it $85 billion in return for a nearly 80% stake. while Washington Mutual (WM, Fortune 500), the nation's largest savings and loan, became the largest bank failure in history.

Inquitus

Disaster imo, the bailout was flawed but it might have worked, now we have fallen off the cliff and its just a question of how far we fall and whether we can survive.

How many banks went under today (nationalised, shotgun marriages, bailouts - whatever) and that was with the prospect of this bill being passed. Just wait for tomorrow and the rest of the week.

Dirk Gently

Is it not just the case that the bail out will happen regardless, as soon as different conditions are worked out, at later date? I take it the bailout option is not off the table? or is it?

Least lisbon doesn't look as bad now...

failsafe

Oh dear lord. It just won't stop falling! Nasdaq and S&P down 8%!

leninbenjamin

UCD_Econ wrote: »

$700 billion is the same over here...

$700 bn = 700,000,000,000.00. There's no difference in zeros, whether it's here or the U.S.

it depends what scale you are using. long scale it's a million million. short scale it's a thousand million.

i know technically short scale is the correct scale but it gets very confusing. i had IT lecturers use the long scale before, and then I'd be going into economics lectures where they used the short scale. i wish people would just specify...

cormie

So is it a good time to buy stuff from US retailers online? Is the EURO going to get much more dollars by tomorrow?

Clytus

I think we're in uncharted waters right now...Even though the DJ is currently about 6.6% down.

I think the primary concern for irish business is the availability of credit.
We're doing OK...in fact Iv had the busiest month all year...but thats not to say I dont need certain lines of credit available. some of my customers have 60 days...yet I have 30 days with my creditors so an overdraft for example is pretty important.

Although there has not even been a mention of it...im looking to the possibility that any lines of credit in the future might not be what I once had available....and theres lies the problem.

many many companies in Ireland will find themselevs in a position of solvency...yet have liquidty issues.

Anyone notice the companies that forward credit on unpaid invoices raising their ugly preditory mugs??

Inquitus

Clytus wrote: »

I think we're in uncharted waters right now...Even though the DJ is currently about 6.6% down.

I think the primary concern for irish business is the availability of credit.
We're doing OK...in fact Iv had the busiest month all year...but thats not to say I dont need certain lines of credit available. some of my customers have 60 days...yet I have 30 days with my creditors so an overdraft for example is pretty important.

Although there has not even been a mention of it...im looking to the possibility that any lines of credit in the future might not be what I once had available....and theres lies the problem.

many many companies in Ireland will find themselevs in a position of solvency...yet have liquidty issues.

Anyone notice the companies that forward credit on unpaid invoices raising their ugly preditory mugs??

Do closes down 777.7 or 6.9%

There are 2 definitions of insolvency

Cash flow insolvency - unable to pay debts as they fall due;
Balance sheet insolvency - having negative net assets: liabilities exceed assets.

A business can be profitable etc but if it can;t pay debts as they fall due for whatever reason then it is insolvent.

Clytus

Inquitus wrote: »

Do closes down 777.7 or 6.9%

There are 2 definitions of insolvency

Cash flow insolvency - unable to pay debts as they fall due;
Balance sheet insolvency - having negative net assets: liabilities exceed assets.

A business can be profitable etc but if it can;t pay debts as they fall due for whatever reason then it is insolvent.

Yeah...thats kinda what I refered to when i said they are solvent, yet have liquidity issues ( maybe Iv phrased it wrongly).

jd

What are the odds on both business and personal lines of credit being curtailed (ie overdraft facilities being reduced)?

leninbenjamin

jd wrote: »

What are the odds on both business and personal lines of credit being curtailed (ie overdraft facilities being reduced)?

they already are. many businesses have begun to have difficulties in this regard since the northern Rock fallout.

Dave!

Anyone able to give us some info on what the effect of this will be on (a) America, (b) Ireland, and (c) the world...? I'm a lowly pleb and don't have a clue about economics!

Inflation? Unemployment? Could our American companies pull out of here?

Time Magazine

Dave! wrote: »

Anyone able to give us some info on what the effect of this will be on (a) America, (b) Ireland, and (c) the world...? I'm a lowly pleb and don't have a clue about economics!

Inflation? Unemployment? Could our American companies pull out of here?

It's fairly unrelated to whether the American companies pull out. If banks fall you can expect severe consequences, such as unemployment at e.g. 15%, as confidence and investing plummets. This would spread to Ireland. It's possible companies would pull out of Ireland as they cut their workforces, but it's more likely they'd cut numbers rather than factories.

But expect the US to come back with a different deal tbh.

Inquitus

Dave! wrote: »

Anyone able to give us some info on what the effect of this will be on (a) America, (b) Ireland, and (c) the world...? I'm a lowly pleb and don't have a clue about economics!

Inflation? Unemployment? Could our American companies pull out of here?

I'd take a punt on house prices continuing to fall, due to higher cost and greater difficulty in getting mortgages combined with excess supply.

Job losses due to recession in the global economy, big US multis shedding jobs across the world, so some rising unemployment.

Media stoked panic about this crisis, and the fact we are in mild recession will probably cause consumer confidence to continue to fall meaning less spending etc which has a knockon in jobs etc.

In my opinion feckwits like McWilliams etc have talked us into this current recession, these sorts of prophecies can easilt be self fulfilling.

Aye a deal will be done in the next week I would imagine to echo DMcW above, but we may see more banks in trouble before then.

mike65

While its going to fcuk the markets up tomorrow, I suspect the House of Representatives will pass a tweaked bill - they've made thier point and will get thrown another bone.

Mike

Time Magazine

Inquitus wrote: »

In my opinion feckwits like McWilliams etc have talked us into this current recession, these sorts of prophecies can easilt be self fulfilling.

Bollix tbh. If it wasn't for people like McWilliams/George Lee/Morgan Kelly warning about the impending burst of the property bubble it would have inflated further and have further to fall. Eighty-, ninety-thousand houses per year isn't sustainable.

And they certainly didn't cause the sub-prime mess!

Inquitus

David McWilliams wrote: »

Bollix tbh. If it wasn't for people like McWilliams/George Lee/Morgan Kelly warning about the impending burst of the property bubble it would have inflated further and have further to fall. Eighty-, ninety-thousand houses per year isn't sustainable.

And they certainly didn't cause the sub-prime mess!

feckwits tbh, even a stopped clock gives the right time twice a day etc.....

And no they didn't cause the subprime mess but I blame them squarely for the housing market mess.

Time Magazine

Inquitus wrote: »

feckwits tbh, even a stopped clock gives the right time twice a day etc.....

Whatever about McWilliams, John FitzGerald and Morgan Kelly were spot on. Not a case of a stopped clock.

Of course few people listened to the ESRI in 2006 and 2007. Let's all listen to Dan McLoughlin. And people who predict a bursting bubble are unpatriotic, or whatever it was Bertie said.

failsafe

Inquitus wrote: »

feckwits tbh, even a stopped clock gives the right time twice a day etc.....

And no they didn't cause the subprime mess but I blame them squarely for the housing market mess.

If something can be talked into bursting, then it was a bubble that wasn't based on sound economic realities. If what the fundamentals of the growth in house prices were strong, then no amount of doom and gloom talking could make a non-existent bubble burst.

mumhaabu

I wonder is it time we all took Bertie Ahern's advice. I am thinking of opening a suicide booth in the IFSC, advance booking recommended and no queue jumping either.

jd

leninbenjamin wrote: »

they already are. many businesses have begun to have difficulties in this regard since the northern Rock fallout.

I suspected that for businesses, but how about for the average punter? In other words, I don't think people who have money on deposit have much to worry about, it is those who are using their overdrafts/credit cards (half the country??)

EGaffney

I'm not too worried, each whip needs to twist five arms on his or her side and this thing is passed as is. Add some sweeteners and it passes even more easily.

Économiste Monétaire

They (members of the house of representatives) have gone on a break, as far as I know. They have elections very soon so Paulson et al better come up with something quick. They need to explain to regular Joe and Jane that although bailing out companies, who have put themselves in this situation, is the wrong thing to do in in theory (Moral Hazard), there are ramifications for the whole country - not just the 'fat cats'.

asdasd

The house reconvenes on Thursday. I think that stocks will come back as people anticipate it will be passed. ( The democrats can win this on their own).

I presume it needs the senate as well.

EGaffney

To call it a "bail-out" is a PR victory for its opponents. It should have been pushed as protection for depositors, to underline the benefit to voters. Calling it a "bail-out" makes it sound like a transfer to bankers, and nothing more, which misses the point about why it needs to be passed.

eamonnm79

EGaffney wrote: »

To call it a "bail-out" is a PR victory for its opponents. It should have been pushed as protection for depositors, to underline the benefit to voters. Calling it a "bail-out" makes it sound like a transfer to bankers, and nothing more, which misses the point about why it needs to be passed.

Yeah I agree the, minister of propaganda in Bushes government must have been on holidays. The Poulson bill being so blatant in its language was also a propaganda failing. I guess they were just complacent cos its so long since they have been challanged.

mike65

Its good to see the gravity of the situation is being reflected by the urgency of the US political establishment as they take a day off

http://www.allheadlinenews.com/articles/7012480842

Mike

Minder

EGaffney wrote: »

To call it a "bail-out" is a PR victory for its opponents. It should have been pushed as protection for depositors, to underline the benefit to voters. Calling it a "bail-out" makes it sound like a transfer to bankers, and nothing more, which misses the point about why it needs to be passed.

Why does it need to be passed?

Changes to marked to market accounting or changes to capital requirements could go a long way to alleviate the problem of illiquid MBS. Changing the rules about bank deposits and capital requirements involves greater risk - but risk is manageable. Buying MBS from banks is final - the money is spent and the debt is real.

You have to wonder at the ability of the people who put together this rescue plan. Paulson and Bernanke had months to come up with a plan - and the best they could do was a three page document that said "Give us $700b or the sky will fall on your head". Maybe they didn't believe it had the remotest chance of passing, and so didn't waste any effort on it.

The point is that there are dozens of alternative solutions kicking around blogsphere that don't involve immediately spending hundreds of billions of dollars.

Republicans blamed the failure of the financial rescue bill partly on remarks by the Democratic speaker of the House of Representatives, Nancy Pelosi. Here is the full text of her speech

SoCal90046

Minder wrote: »

Why does it need to be passed?

Changes to marked to market accounting or changes to capital requirements could go a long way to alleviate the problem of illiquid MBS. Changing the rules about bank deposits and capital requirements involves greater risk - but risk is manageable. Buying MBS from banks is final - the money is spent and the debt is real.

You have to wonder at the ability of the people who put together this rescue plan. Paulson and Bernanke had months to come up with a plan - and the best they could do was a three page document that said "Give us $700b or the sky will fall on your head". Maybe they didn't believe it had the remotest chance of passing, and so didn't waste any effort on it.

The point is that there are dozens of alternative solutions kicking around blogsphere that don't involve immediately spending hundreds of billions of dollars.

Republicans blamed the failure of the financial rescue bill partly on remarks by the Democratic speaker of the House of Representatives, Nancy Pelosi. Here is the full text of her speech

There are a number of members of the Congress calling for the SEC to change the marked to market rule. There are also calls to raise the FDIC insurance ceiling. Funds moved from WaMu is what sealed the demise of that bank. Had all deposits been fully insured, the bank might not have run into problems. There are definitely other fixes that can, at least, buy time.

I think that there is a failure of leadership in the House. I am a fan of Nancy Pelosi, but her actions in the last few days have been disappointing. She hasn't signaled a bipartisan approach, which is something that is needed.

eamonnm79

Correct me if I am wrong, and I very well could be but doesnt the Mark to Market rule mean that bank have to value their assets at current market values?
Isnt this a good thing?
Acceptance of doddgy numerics is part of what got america into the trouble they are in at the moment.
Enron accounting, Hedonics in GDP. They need to start reporting with greater accuracy, not less.

asdasd

Changes to marked to market accounting or changes to capital requirements

Can you explain in more detail what you mean? Ta

SoCal90046

eamonnm79 wrote: »

Correct me if I am wrong, and I very well could be but doesnt the Mark to Market rule mean that bank have to value their assets at current market values?
Isnt this a good thing?
Acceptance of doddgy numerics is part of what got america into the trouble they are in at the moment.
Enron accounting, Hedonics in GDP. They need to start reporting with greater accuracy, not less.

It's not clear what you're talking about here.

The concept of historical cost is a time honored idea in accounting; that is, the cost for the resources of an entity is recorded at its acquisition price rather than its market or replacement price. This approach has been widely applied in accounting for years. The criticism of the concept of historical cost is that it often undervalues assets.

Mark to market, as it is normally applied, means correcting the cost of financial assets to market price. FASB 157, which dates to late 2007, is the application of the mark to market concept for public companies. Changing this rule, if it applied every company, would not affect transparency.

I don't know what the term "doddgy numerics" means.

The Enron issue is separate and distinct in that it predated the market o market rule; it also involved off balance sheet activities and criminal activity.

I have no idea what the term "Hedonics in GDP" means.

The historical concept isn't at variance with accurate reporting.

Minder

The mark to market rule as I understand it causes banks to mark down the value of their mortgage backed securities - the low market value of these assets shows on the banks balance sheet as a shortage of capital - now the bank must raise capital to comply with the rules or be declared insolvent. Another way for the bank to preserve its capital is to avoid lending.

By avoiding the marked to market rule, banks could value their MBS at something other than an illiquid market value - say a value based on the intrinsic value of the underlying product. That balance sheet valuation avoids shortages in capital.

FDIC insure deposits in banks with a limit of (i think) $100,000 - so if you have a greater sum than $100k in a bank, your deposit (in excess of $100k) is at risk if that bank fails. Raise the limit to say $250k and that goes some way to ensuring that depositors leave their money in the bank - again preserving the capital of the bank.

SoCal90046

Minder wrote: »

The mark to market rule as I understand it causes banks to mark down the value of their mortgage backed securities - the low market value of these assets shows on the banks balance sheet as a shortage of capital - now the bank must raise capital to comply with the rules or be declared insolvent. Another way for the bank to preserve its capital is to avoid lending.

By avoiding the marked to market rule, banks could value their MBS at something other than an illiquid market value - say a value based on the intrinsic value of the underlying product. That balance sheet valuation avoids shortages in capital.

FDIC insure deposits in banks with a limit of (i think) $100,000 - so if you have a greater sum than $100k in a bank, your deposit (in excess of $100k) is at risk if that bank fails. Raise the limit to say $250k and that goes some way to ensuring that depositors leave their money in the bank - again preserving the capital of the bank.

That's it; it only affects financial assets. In the current turmoil the mark to market rule could make some banks vulnerable to predatory attacks. Of course, it only affects the weakest banks and like accelerates what should occur anyway.

FDIC insures IRAs for $250k. Some people argue that, at least temporarily, all deposits should be insured for the full amount. It would definitely help banks.

Minder

SoCal90046 wrote: »

The concept of historical cost is a time honored idea in accounting; that is, the cost for the resources of an entity is recorded at its acquisition price rather than its market or replacement price. This approach has been widely applied in accounting for years. The criticism of the concept of historical cost is that it often undervalues assets.

If I'm not mistaken, it was the correction of this mechanism that was proposed by the Jubilee 2000 organisation as a way to cancel the third world debt held by US and European banks - the gold reserves on the balance sheets of central banks are recorded at historical cost, not marked to market. By marking to market the gold price - the resultant positive adjustment would be used to cancel out the debt.

Here is a Statistical release from the Federal Reserve detailing US Reserve Assets. See the footnote

Gold stock is valued at $42.22 per fine troy ounce.

Incidentally adjusting the gold price to a current valuation would improve the balance sheet at the Federal Reserve by $300b.

EGaffney

Minder wrote: »

Why does it need to be passed?

Hmm. I must say that I don't necessarily think it's a good plan, and I was looking at it from the perspective of its proponents, who have done nothing to make it sound good to the public. It was more analysis than opinion. Now having said that, I do think the administration needs some powers to finance some banks in trouble, if the impact of a collapse on society as a whole is grave enough, but buying only the least productive assets of any firm (including financials) seems like a bad way to do that.

EGaffney

Incidentally, Barack Obama agrees with me that "bailout" is a poor choice of words, according to a speech he just made.

SoCal90046

Minder wrote: »

If I'm not mistaken, it was the correction of this mechanism that was proposed by the Jubilee 2000 organisation as a way to cancel the third world debt held by US and European banks - the gold reserves on the balance sheets of central banks are recorded at historical cost, not marked to market. By marking to market the gold price - the resultant positive adjustment would be used to cancel out the debt.

True, but the Fed doesn't use mark to market accounting. Nor for that matter does the Federal Government. If the Treasury assumes non-performing loans, it won't be burdened with the same accounting requirements as are banks.

The comment about third world debt is interesting, because if you go back to the 1980s, banks in the US had serious potential problems with third world debt. Then, before mark to market or fair value accounting, for many banks the debt was worth at most ten cents on the dollar. Had fair value accounting been in place, it's likely that over half of US banks would have been forced to fail.

There's an argument to be made that fair value accounting, in the current environment of what appears to be fire sale pricing, tends to exacerbate the situation rather than provide decision-useful information: the ultimate goal of accounting.