In looking around it appears that the market did not like the details provided by the new Treasury Secretary today. I must admit I was looking for something more specific than “We don’t know what we are going to do.” It is apparent that this is a much more complex issue than what anyone has reported. Since Mr. Geithner was involved in the initial plan put in place by the previous Secretary, and not new to the issues involved, you would have thought he would have had more details.
As an accountant, I believe a lot of this could be solved by the SEC removing the “mark to market” accounting rule. A large amount of the bank problems are because of mark to market they are having to write down the value of performing assets. 90% of all mortgages are currently being paid on time, but banks have to write down these assets according to the mark to market rule which is causing asset erosion and causing the banks to become insolvent.
The other benefit of this is it costs the taxpayers nothing!
Any investing you do now please use tight stops or use a short ETF as a hedge to your long holdings. As always please review the disclaimer. I am not a professional investment adviser or tax adviser.
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