The children’s rhyme about ‘rain’ can now be applied to Other Than Temporary Impairment (OTTI). Under specific direction from Congress, FASB has modified both GAAP accounting’s approach to measuring fair value as well as OTTI. As always, the devil is in the details and these are still proposals, subject to finalization. But the trend is.
Currently we have an approach to solving “The Greatest Delveraging in the History of the World” that reminds one of a dysfunctional doctor’s office. The doctors are financial experts ‘behind the scenes,’ trying to work on solving the problem, while the receptionist is much like the politicians. The receptionist has an idea about different procedures, but doesn’t fully understand.
“These guys’ companies were on a Sherman’s March through their companies, financed by our 401ks, and all the incentives of their companies were for short term profit. And they burned the f–ing house down with our money and walked away rich as hell, and you guys knew that that was going on.” – John Stewart,.
So what if Warren Buffett’s annual letter to shareholders says the economy will remain in a shambles through 2009 and probably beyond? We didn’t need the Oracle of Omaha to tell us things in the economy look ugly. However, when reading any good narrative, it is important to view the entire tome before drawing conclusions and here is where.