Did the enforcement of Fair Value Accounting i.e FAS 157 effective for fiscal years beginning after November 15, 2007 coincide with the early stages of the meltdown of the bond and equity markets ? Or was it a coincidence ?

There is no doubt that some financial-services firms found themselves ill-equipped to perform such acrobatics. Finance executives in the sector complained that the fair-value rules were “pro-cyclical” – that they were a self-fulfilling prophecy forcing banks to sell their securities in plummeting markets.
( paraphrased from CFO.com )

The big picture, a common sense view …. CSCO stock was at $80 in 2000. The cash flow value was $18. Had margin been against $18 instead of $80 the bubble in tech stocks may never have happened. Also in 2002, CSCO was at $11. Cash flow value ? $18. How do the purists defend Fair Value accounting ‘allowing’ margin loans against an $80 stocks really worth $18 by conservative estimates ? Migrate this example to Las Vegas real estate in 2005 and you have the achilles heal of Fair Value accounting.

The reverse is now happening, a downward spiral as assets sell below their intrinsic value.

George Soros speaks of reflexivity as the main component of his investing thesis. The key element is banks lending against overvalued assets create bubbles and the withdrawal of lending against falling asset values creates the bust. A mark to model across all spectrums, Margin…Home lending etc would REDUCE the risk to our financial system and bring sanity to our financial markets.

The real fix is INDEPENDENT firms that audit companies. Firing without cause should be eliminated when it comes to these firms. Whistleblower laws with teeth wouldn’t hurt either.

The case is made by an esteemed former official …
http://sec.gov/comments/4-573/4573-79.pdf

The effects are felt …..
http://www.researchrecap.com/index.php/2008/07/09/guide-to-interpreting-mark-to-market-losses-of-monolines/

The proof is in ……
http://seekingalpha.com/article/106492-toxic-bear-stearns-mortgage-paper-performing-well

But a feedback loop occurred which caused the currency to drop much further than expected and resulted in such a great capital flight that a severe recession was the result. This is what seems to be happening worldwide. The contraction is feeding on itself so severely that no amount of central bank liquidity support can prevent it.

Is it really possible that unless radical money printing occurs and savers are forced to spend THEIR money or lose it, a new depression will result?

Are we going to see the mother of all whipsaws?

And frankly, as I have posted before, what scares me here, and I have done my own investing for decades, is how this thing is feeding on itself worldwide, and how there seems to be no strong nation or group of nations emerging to pull us out of this…I think the China thesis is nuts…

My comment pertains to 2009 as a whole. That’s not to say that there can’t be a single quarter with a negative 10% reading.

I would certainly like to see what the GDP for the 4th quarter comes in before I had more conviction that a -10% is not a likely outcome…

Again, I agree with you, -10% seems unreasonable based on my life experiences heretofore, but let me see this quarter….

QID is a good option for people who have money in an IRA.

For people with money outside of an IRA, shorting QLD offers advantages and disadvantages over going long QID.

People who have a weak stomach (and who lack conviction) might just prefer DOG for their IRA’s.

I would say though that EEV looks downright dangerous for anyone but the most nimble.

The worst case (IMO) is a series of rolling recessions for the next 10 years.

jmborchers, or anybody else, can you explain this statement? Here are the facts…since 9/2/08, probably the most volatile period in the history of stock markets, QQQQ has gone from 46.12 to 26.67…a 42% decline. QID, double inverse fund, has gone from 42.31 to 90.11…a 113% gain, plus it paid a .20 dividend.

What do you have against QID that you constantly put out false and ridiculous statements, not backed up by facts? I said in January QID was the buy of a lifetime, after 10 years of research. I am up 137% YTD. My target is still 120.

I don’t KNOW that it will be better, I suppose it could be worse; but, intuitively, it seems to me that decreasing GNP that much in a service driven economy would be harder. So, times should not get nearly so lean. Besides, the presses are working overtime this time.