It is true that the root of this crisis is bad mortgage loans, but probably 70 percent of the real crisis that we face today is caused by mark-to-market accounting in an illiquid market. What's most fascinating is that the Treasury is selling its plan as a way to put a bottom in mortgage pool prices, tipping its hat to the problem of mark-to-market accounting without acknowledging it. It is a real shame that there is so little discussion of this reality.That was posted today on the US Conservative Central blog … a political blog. The message is reinforced in a second post.
Wesbury and Stein complain about the lack of discussion on this issue, but they wrote originally on 25 September. Since then, on the US blogs, discussion on the issue has exploded. In Britain, however, there is still virtually no discussion.
We know it was on the agenda at yesterday's meeting in Paris but, bizarrely, the only reference we can find to any subsequent decision is in The New York Times. From that source, we learn that: "Leaders said they would try to rewrite European accounting rules by the end of the month to limit the losses banks have to write off, an effort to match changes in 'mark-to-market' accounting rules in the United States while keeping Europe's financial sector competitive."
When you seem to be totally out on your own, as seems to be the case with this blog on this subject, it is reassuring to see the Conservative Central blog take it so seriously. It confirms that we are not wrong in focusing so heavily on the issue.
But why, for news of our own government's decision do we have to read it on the NYT? Why is there not a single British newspaper, apart from The Sunday Telegraph carrying Booker's column, capable of discussing this. And how is it that the EU rewrite the rules by the end of the month, or have we missed something?
Meanwhile, bad news flows in so fast that it is a job keeping up with it. European banks are going down like ninepins, Germany appears to be joining Ireland and Greece (maybe) in guaranteeing all private savings accounts, putting, says AP Europe's biggest economy at odds with calls for a unified European response to the global financial meltdown. See this and this.
Do I sense this crisis is gathering pace, or what?