Current Feed Content from 4 Nov 08 10:04
Neither Chrysler Nor GM Has Any Further Business Reason To Exist. The Government Shouldn't Stave Off the Inevitable Just For A Few Votes
Mon, 27 Oct 2008 04:57:41 ESTIs the American Government smart enough to see that the average American has already written off General motors, Ford, and Chrysler? The proposed bailout of any of these mismanaged train wrecks is nothing of the sort; it would be rather a stimulant to a dying industry intended to get an unrepresentative government past yet another election offering no change at all to the status quo. It is, as always with government programs, robbing the future to keep up the appearances of the present as a work-in-progress instead of a dead end.Jack LiftonExacerbation or exposé?
Mon, 13 Oct 2008 05:27:20 ESTundefined undefined Listen to the message and don’t shoot the messenger if you think it’s bad news. And don’t endorse public policies based on deceptive reporting. undefined undefinedPaul MillerMore Attacks on Fair Value
Fri, 03 Oct 2008 07:31:33 ESTWhy does the SEC not enforce the rule against "naked short selling?"Robert McCabeFair Value Accounting - The Good And Bad Of It In The Real World
Mon, 15 Sep 2008 04:57:49 ESTFair value accounting, or mark-to-market accounting, is not new. The debate of how to account for value has been around for decades. However the implications of fair value accounting, versus historical accounting, are far reaching and often not grasped. A society needs to be careful in setting accounting standards that may or may not reflect its cultural values.Robert KempIs “Fair-Value” Really that Dangerous?
Wed, 10 Sep 2008 08:03:45 ESTThe article makes several claims that need a response. First, it declares the principal question that accounting tries to answer is “What is a company really worth?” Second, it states that fair value played a role in the recent “economic meltdown, ” because the fair value rules forced “banks to sell their securities in plummeting markets.” Third, it states that historical cost reporting “enabled companies to work their way out of trouble, ” by waiting until the market turned around. Fourth, the case is made for fair value measures being unreliable. Finally, it’s noted that International Financial Reporting Standards (IFRS) favor greater use of fair value.Robert McCabeValuation - The Trick Is In The Fundamentals
Mon, 25 Aug 2008 08:08:28 ESTTo accept or reject an offer to sell all or part of a company is a challenge. There are two issues. First is the maximization of shareholder value. The second is understanding the basis ofconflicting valuations.Robert KempIs it bad reporting or does naivete reign at the highest levels?
Thu, 07 Aug 2008 07:54:22 ESTMaybe it's just me, but these quotes from Herz and Pozen are off-base. When they suggest there could be a pure historical cost system, they are talking about something that doesn't exist and hasn't existed in a 100 years, if even then. I have to believe that Herz was misquoted or misinterpreted; I can believe that Pozen would misunderstand. Nothing will come out of this. There will be no turning back to more costs. There will be a continuing progression toward fair value accounting for the simple reason that it produces the information that users want and that society needs them to have.undefined undefinedPaul MillerCould something be clearly worth zero?
Mon, 28 Apr 2008 07:45:46 ESTHow can an SEC Commissioner who is obviously not familiar with Fair Value estimates call for changing the existing guidance? The value of something is zero if that is what you can buy and sell it for.Robert McCabeWhy do bankers oppose the use of fair value?
Wed, 23 Apr 2008 15:44:49 ESTClaiming a "mixed attribute" accounting model provides a better picture of a company's business and earnings engine, bank trade groups blast full fair value. The bank trade groupsargue that periodic updating to fair value would lessen the predictive value of future cash flows. They also argue that “a mixed measurement model is essential for the faithful representation of an entity’s business model and how it generates earnings.”Robert McCabeSecurty Writedowns Today May Lead to Massive P&L Charges Later for C, MER and Others
Mon, 21 Apr 2008 15:31:12 ESTDepending upon management's classification of a security(i.e., either "trading" or "available for sale"), a charge may or may not appear on the income statement in the same period as the write-down on the balance sheet. If the security is classified as a trading security, the charge on the income statement will occur in the same period as the write-down. However, if the security is classified as available for sale, the charge bypasses the income statement and is taken directly to stockholders equity. If the value of the security does not recover prior to its liquidation, the charge typically is taken in the year of liquidation. The potential charge for write-downs related to available for sale securities can be quantified by looking at the statement of stockholders equity, particularly other comprehensive income.Thomas KleinAccounting for subprime investments: Denial is not a river in Egypt
Mon, 07 Apr 2008 17:12:22 ESTThis article reveals the bizarre mindset of managers who (a) want to take huge risks for a shot at high returns, (b) don’t mind reporting results when they succeed, but (c) don’t want to report their losses. To put it another way, they want to invest in risky securities but report income from their ventures as if they put money into certificates of deposit. There is no legitimacy in twisting the accounting to cover up the results, and no reason to blame the chief accountant or FASB for the problem, or to expect the regulators to take them off the hook by allowing the losses to be hidden.Paul MillerBush Nominates Two Democrats to SEC: More of the Same is Likely
Mon, 31 Mar 2008 07:12:31 ESTWill President Bush's recent nomination of two Democrats to the SEC make it more investor friendly? Not likely!Ronald KiimaDerivatives - More Disclosure Is Always Better for Financial Analysts
Thu, 27 Mar 2008 08:56:28 EST1. Value is defined by risk. Risk deals with uncertainty of the future. How a firm manages risk is a major determinant of its value. 2. Accounting standards are dedicated to reporting the past. Given it is the past, there is little risk or uncertainty regarding such events. Merely reporting the past does not give the financial analyst the insights needed. 3. FASB 161 tries to bridge this gap between past/present and the future. It attempts to make management disclose intent. Itattempts to answer the following question: "How will current actions and positions affect future performance?"Robert KempDid General Motor's Financial Controls Fail, So That A Synthetic, Made-Up, Business Utilizing Minority Status Became 80 Million Dollars Richer?
Mon, 17 Mar 2008 05:19:11 ESTDid General Motors' purchasing relax its standards foroversight and forcredit allocation for FUCI Metals, because FUCI was set up as a minority business enterprise? Or, was GM in on it from the beginning, but lost control of it?Jack LiftonRecession to Depression?
Tue, 11 Mar 2008 16:52:13 ESTThrowing money into the economy may not be the real solution! Having capital to lend may be useless if everyone remains to scared to borrow!Martin AlpertGermany seeks to protect its companies against foreign government funds
Thu, 28 Feb 2008 23:09:39 ESTMore than USD 42 billion was invested by foreign government investors in Germany in 2007 and more than 2.2 million German employees work for companies owned by non-resident government and private funds. In regard to foreign investment funds, a German draft bill would allow the German government to prohibit the acquisition of a stake greater than 25% in a company located in Germany by a non-resident investor. Although the draft bill aims primarily at government-owned funds, the law would equally apply to any investor, whether privately or publicly owned, in order to allow blockage of controlling foreign interests in German companies. The President of the European Commission, Jose Manuel Barroso, has argued for a “European approach”, which need not automatically mean a European law, but which should avoid national solo attempts at restrictions.Peter DehnenUnderstanding the Pros and Cons of Pension Fund Investing - the Issue Applied to Asian Investments
Tue, 26 Feb 2008 15:43:32 EST1.Investing in Asia has three benefits. First, there are thereturnsfrominvesting in environments that show greater growth potential than in the West. Second, there are the returns from investing in opportunities denominated in currencies that are forecasted to appreciate. Three, there is the benefit of diversification. 2. The costs, or risks, of investing in Asia are threefold: First, there is the risk that high growth opportunities present. Second, there is the risk of investing in a depreciating, not appreciating currency. Third, there is the asset-liability risk inherent in all financial intermediaries, particularly pension funds.Robert KempShould Sovereign-wealth funds be regulated?
Tue, 19 Feb 2008 01:37:57 ESTIs the fear of sovereign-wealth funds justified? Are sovereign funds being used for nefarious objectives? Can the U.S. Securities & Exchange Commission regulate sovereign funds?Robert McCabeIs Accounting Regulation Being Dismantled?
Fri, 08 Feb 2008 13:47:13 ESTCan the SECprotect investors without regulation?Robert McCabeWill IFRS be required soon?
Thu, 24 Jan 2008 15:33:05 ESTRecently, the SEC eliminated the GAAP reconciliation requirement as part of Form 20-F for foreign issuers. Almost simulaneiously, the Commssion issued a Concept Release that would allow U.S. issuers to drop GAAP and use Interantional Financial Reporting Standards. The implications of these moves are vast and the author believes are at best premature.Robert McCabe
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