If you don’t like the numbers, change the way you report them!
For years financial institutions have valued assets at what turned out to be inflated numbers. As the financial crisis grew, these numbers became more visible which created massive changes in their stock prices wiping out billions of dollars in value. Valuation reductions of billions and billions of dollars have created quite a mess for everyone.
So how do we make the economy look better? We change the way the numbers are reported. Sounds like the same type of accounting that started all this!
The S&P 500 index dropped General Motors from its group of companies. GM’s stock has gone from $24.24 to $1.27 during the last year. Taking GM out of the S&P is like you deciding you don’t want to report your credit card debt when applying for a home loan.
AND while we’re at it, lets change the way we’re reporting the numbers:
“FASB gives firms more leeway in valuing assets”.
“The independent Financial Accounting Standards Board voted to adopt new guidelines under the so-called mark-to-market accounting rules, which require companies to value assets at prices reflecting current market conditions. The changes,…will allow the assets to be valued at what they would go for in an “orderly” sale, as opposed to a forced or distressed sale.”
Wouldn’t you like to only report you assets and not your debts?