Morning Post

Untitled
Ando Hiroshige

Sanity is a madness put to good use.
George Santayana

From Barron's---They note that FASB action below:

the FASB gave banks a one-year reprieve from shifting various off-balance-sheet assets onto their balance sheets. Had the rule change been implemented, banks would have had to absorb an estimated $5 trillion of assets, which would necessitate either their sale or an increase in capital, neither of which would be easy in the current market. So, for one more year, it's the accounting version of don't ask and don't tell.

The FASB is 'supposed' to be an independent rule-making, standard-setting entity. I guess not. I've not read the underlying standard (and likely will not due to the soporific effect), but at the very least I would expect some disclosure regarding the magnitude of the off-balance sheet assets in question. It seems to delay the uncertainty with respect to such assets. Uncertainty is not a friend to the investor.

Second, Barrons notes this:

As for the Fed, these latest measures help it further separate its function as lender of last resort from the conduct of monetary policy. That allows the central bank to continue to talk tough about inflation and maintain the expectation that its next move might to raise interest rates.

While the perception is that the Fed is running a highly accommodative policy, in order to relieve pressure on the financial system. That's based on based on its low federal-funds rate target of 2%.

I posit in this space some of my "theories". These theories are merely my ruminations as a layperson. Frankly, without sounding boastful, I'm proud that I've seen some of the issues pretty objectively. Many have been bullish with their "don't fight the Fed" emphatic statements--citing all of the great things that come when the Fed gets engaged. One service that I subscribed to, and from a person whose opinion that I respected, said this one too many times. I cancelled. My theory has been that all the Fed was doing was re-solving the banks: they were pouring money in a hole, not increasing the water level. I'm a lay person. I don't need to pay for a service that relies on the past without being attentive to issues of the present that render such an opinion patently false.

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CHK reported earnings last night. They had a surprise loss due to $2B in losses due to natural gas hedging. The press release reported that their "adjusted" income was a penny ahead of expectations. Hedging is a normal course of business activity. To present this on an adjusted basis smacks of slight of hand.

Jim Cramer yesterday called "THE" bottom in the market. I would be remiss in noting that (1) he never saw the market tumbling and was a rapacious purveyor of all of the "stories" that would fuel a bull market until the days on Earth were final; (2) he never saw the credit crisis coming (though he had an infantile meltdown on TV that CNBC today is somehow linking to causing Fed action); (3) he's been a perennial bottom caller.

I'm so disgusted with his behavior that I will not be renewing my Real Money subscription in the Fall even though I value Rev Shark's blog and the bloggers there very much. I'm also mad at myself for letting myself get so angry about it! But the Jim Cramer's in the world make us grateful for the GaryK's, Jeff Saut's, Rev Shark's, Bill Cara's, Barry Ritholtz's and others of the world.