Jackson Jambalaya

Some writers are showing more sense than the money honeys. David Reilly, a columnist for The Wall Street Journal, echoes The Market Ticker in calling for more transparency on balance sheets, warning the current crisis will only get worse:

"The intensifying debate over mark-to-market accounting is missing the point.
The question shouldn't be whether regulators should relax or suspend the practice. It should be whether regulators should encourage banks to expand their use of it.
The reason: Credit markets are already marking bank balance sheets to their own view of market values, or walking away in the absence of such information.
That isn't going to change if the U.S. or Europe alters the accounting rules. If anything, it might give these investors yet another reason not to invest. What markets really need is more information about who is sitting on what losses. (Sound familiar? Do you hear this Maria or the goatee?)
However, many banks and some governments want to row in the opposite direction. (They want the party to return without the hangover.) The American Bankers Association on Monday released a letter calling on the Securities and Exchange Commission to essentially gut mark-to-market accounting. Internationally, accounting rule makers Monday eased some mark-to-market rules. But it isn't clear whether this will be enough to appease the European Union, which may still move to water down the practice further.
The argument against mark-to-market accounting is that it forces banks to use overly pessimistic market prices to value holdings. That triggers losses that deplete capital.
Debt investors don't buy that. They believe that the values banks put on their loans, which mostly aren't marked, still don't adequately reflect losses that will result from the housing crisis. Investors have also cast a jaundiced eye on possibly understated losses on the securities that banks do mark to market prices.
In other words, investors still think some bank balance sheets are cuckoo. Accounting rules should be used to remedy that situation, not make it worse...."

This might be why the credit markets are not loosening up despite all the money we are dumping into the system. First we save Bear Stearns. Then we write a check to Fannie only to see the government quickly take it over. We pass a $700 billion bailout bill, only to see it balloon to over $800 billion, then watch the government quickly take over part of the banks without buying up the toxic assets as we were told they would do when the bill was debated. As Japan did in the 90's, the Fed cut rates to virtually zero, ignoring one simple fact: low interest rates are useless if investors, as well as the public, are too spooked to borrow money. Unfortunately, few people are telling you the truth because they are either trying to make the facts fit their agendas or simply don't understand how this stuff works. Don't watch the Dow or bond markets as much as the credit markets, as they are a more accurate barometer of what is coming down the turnpike. These are turbulent times indeed.