FASB 157

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You may be wondering what this FASB thing is.  It’s a rule that accountants have to abide by.  Which because of a change by the folks who administer all of the rules means more dirt is swept under the rug.

You’ve probably heard the term, “mark to market.”  What it basically means is that the assets on the books of the banks have to be based upon what they are actually worth.   If you’ve bought or sold a house then you know the realtors look at comparable sales to figure out how much your house should be priced at.  Because the rule was changed banks don’t have to mark the assets on their balance sheets to what they are worth, but to some sort of mythological value what the asset may be worth in a perfect marketplace.

As an accountant and as an investor I don’t like it.  The banks are in the same shape now as before the rule change, yet the bank stocks go up.  It’s paper, not some positive increase based upon efficiency or operations.

Make no mistake, cash makes Washington, DC turn.

The FASB approval comes after an effective lobbying campaign on Capitol Hill by the American Bankers Association and other interest groups. Roughly 800 bankers gathered in Washington earlier this week, in part, to meet and press lawmakers to send a message to FASB that the accounting rules needed to change.

Jeesh man, first the congress people give the banks TARP then the bankers give money back to the congress people as campaign donations.   Then the banks are being weighed down by toxic debt and the bankers and their proxies basically go protest on the Hill and lo n’ behold the FASB rules get changed so the banks can mark the left side of their balance sheets to unrealistic values.This is getting truly bizarre.

Anyways, what’s left to do but,

GET OUTSIDE EVERYDAY!!

p1010060Nice day, huh?  A week of rain is in the forecast now.  I planted Sunday to be sure to get the benefit of the rain.  I had black plastic down for a couple of weeks to warm the soil.  I planted radishes, mesclun mix, spinach, arugula and peas.  I’m a little later then I wanted.  The way I grow lettuce is to heavily plant a 3*3 square.  I can reach into it from all sides.  Then I cut the lettuce with a pair of scissors when its 3-4 inches tall.  I basically give it a haircut and eat the baby lettuce.  It’ll regrow.  A couple of weeks later I’ll plant another box.    My lettuce will bolt later in the season.  I’ll also work a little all purpose organic fertilizer into the top couple of inches of soil.  Happy growing.

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8 Responses to “FASB 157”

  1. marc Says:

    Hello,
    I really enjoy your blog, but I do have one question? As an accountant, what are your views on income tax law? I find most accountants avoid answering or researching this question, but I get the feeling you are of a different stride.
    Marc

  2. Abraham Says:

    At the risk of setting off a firestorm. I believe in an income tax. I believe in a graduated tax. I believe that it is ok for the government to use tax policy to guide behavior.

  3. Jaye Says:

    A little off topic…I’m new to “prepping” (have been at it since 10/2008) and the thing I struggle with most is feeling afraid. I live alone and don’t really know anyone else who sees what is happening, except maybe my parents and they’re getting older, so don’t have the same urgency to prepare. I have learned so much from your site on the basics (flashlights, first aid kits, finances), but wondered if you had any tips for feeling afraid of the unknown. Thanks for your help.

  4. Abraham Says:

    Jaye-that’s a tough one. I guess you’d have to look at the specifics of your fears. Some stuff you can change and some stuff you can’t. Work on fixing or changing those things that you are in control of. Things that you can’t control, you have to just learn to live with the idea that our world controls us and that we don’t control our world. There are boogey men and asteroids do fall from the sky. The most we can do is try try and file down the sharp edges by getting educated, getting informed, getting in shape, getting prepared and …….you know what’s coming ……and………..GETTING OUTSIDE EVERYDAY!!

  5. I drive my tractor is pearls... Says:

    Not a firestorm but….

    Instead of an income tax, a consumption tax would do the same thing, I think you want, which is make those that make more pay more. Those that make more, would most likely purchase more and therefore pay more tax.

    A normal reaction to a consumption tax is the argument, but what about the poor having to pay more for their necessities – a properly constructed consumption tax would allow necessities not to be taxed. I do not feel guilty one bit taxing the poor if they choose to purchase things like ipods, flat screens or the like – they can pay the tax just like the rich for buying crap like that.

    Also – Part of the prob we have with the Government that we currently have is that they think they should be able to control us – through taxes or otherwise. That is the wrong way to look at it – it is US that should control THEM….In the current system, we are nothing more than glorified slaves working for them.

    Pearls

  6. Abraham Says:

    Sorry Pearls I don’t believe in a consumption tax or a flat tax. I like a graduated income tax. I would tax unearned income at a higher rate, do away with the ceiling on FICA contributions and means test Social Security.

    I also do believe in the government’s power to use tax policy to spur or inhibit certain behaviors like through deductions or tax credits for investing in new technologies or starting new businesses or using all of the sin taxes to reduce so called bad behaviors. I do think the tobacco tax is out of control though, and I don’t even smoke.

    I would legalize just about everything – prostitution, most drugs and gambling and tax them.

  7. I drive my tractor is pearls... Says:

    Taxing all the legalized stuff you mentioned is a consumption tax. I do not pay the tobacco tax because I do not smoke.

    But “UNEARNED INCOME”??? Like inheritance? Because thats the only unearned I seem to find. If you are talking about investments – I have worked, saved and decided to RISK my OWN money – win or lose, I should reap what I have sown. Why should I pay more because someone else was too scared to risk?

    We own our own business – we pay TONS of tax because its all taxed on our personal income tax. The more we are taxed, the less we have to invest in any “new technology”, hire more people or expand.

    And to continue programs like Social Security and the welfare programs is a huge problem in this country. When 50% of people in this country depending on the Government to take care of them, there is no incentive to work or take care of themselves.

    Dont spread my wealth, spread my work ethic – saw that bumper sticker the other day 🙂

  8. Abraham Says:

    The more apt question is why should someone that collects dividends and interest income be able to pay a lower rate of tax then someone that wakes up to the alarm clock, stands on their feet all day, sweats or humps bricks?

    The capital gains tax rate is 15%, that’s unearned income. I don’t believe that income from investments should be taxed so much less than income from sweat wages.

    I also own my own business and you and I like all business owners get an enormous benefit from being able to deduct our expenses. If you don’t own a business you can’t take business deductions. This is a philosophical statement by government that it’s good to start and own businesses. I agree with using tax policy in this way.

    If Social Security was means tested like if someone had a $5,000,000 home they couldn’t get SS then we would all hopefully being paying a lot less into it. There’s no excuse not to means test Social Security. You want to make SS solvent, then means test it.

    I do agree with you that sometimes it seems like it’s not even worth it trying to get ahead.

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