The markets began to tank in August. The market cheerleaders said it was nothing to worry about.
Three months later and the economy continues to deteriorate, as you can find out from any number of sources. I won’t belabor the point. However, this FASB 157 rule (Federal Accounting Standards Board) changing on 11/15 will probably open up another can of worms, forcing banks to value level 3 assets at market value, as opposed to the “unobservable” (ie: pretend) values that have been on the books so far.
And guess what now? New reliable estimates suggest that using these market prices – rather than level 3 model gimmicks - will lead to losses of another $100 billion on top of hundreds of billions of subprime losses. And some market participants are already talking – quite realistically – about total losses from this credit disaster in the $500 billion range.
Nouriel Roubini has the details. Check out the comments. Even if you don’t follow the strange world of finance, you can’t miss the horror emanating from those who do. This is a big chocolate mess. Someone has linked to the financial petition I mentioned here.
