In an earlier post, Musings on Mark-To-Market, I talked about the problems of this accounting rule in the current economic crisis.

RichardH commented that valuing assets is more of an art than a science.

I know this is anathema to accountants, but perhaps a company ought to be able to say, “We don’t know what our assets are worth”.  In this environment, that is probably a truer statement than putting almost any kind of misleading number on it.

Other possibilities would be to allow companies to state a range.  They might be able to say to their creditors, “if you make me sell all my assets today they are worth $100, but if you let me sell them over time and after the economy recovers they are worth $1,000.”

I remember a discussion with an ex-boss of mine who asked me to tell him how long a software-development project would take.  He then asked me if I was 95% certain about this number. I could not honestly tell him that I was.  After berating my poor abilities to manage a software project after my 40 years of experience, he asked me again how sure I was.  I told him I was 95% sure.  He then proceeded to ask me that if I was not 95% certain 5 minutes ago, how could I be so certain now?  I told him that I was just trying to give him the answer that he wanted to hear. I guess I should have waited more than 5 minutes to change my answer.

RichardH’s comment on the earlier post indicates that he has similar stories to tell from his world.

I’ll have to ask my daughter, the accountant, if there is any parallel between my experience and that of the accounting world.

Follow this link to the article in The Atlantic magazine

On the other side of the crisis, America’s economic landscape will look very different than it does today. What fate will the coming years hold for New York, Charlotte, Detroit, Las Vegas? Will the suburbs be ineffably changed? Which cities and regions can come back strong? And which will never come back at all?

Reader GarlandB has brought this article to my attention.  I haven’t had a chance to read the complete article yet. I save the link here for my own reference so I can get back to it after supper.

Now that I have competed reading the article, I see that there are a lot of ideas in there to contemplate.

One of the interesting ideas is the purported delitirious effect on the economy of too large a percentage of home ownership. This comes very near the end of the article.  The author’s arguments sound plausible to me.  I think they deserve some time to digest before deciding if they make sense or not.

What do you think?

If you want to see Cramer, CNBC, and Santelli put into perspective, you have to watch this Jon Stewart clip.