Comments on: Is Mark to Market Crippling the Economy?

By: Straight Up Saturday, April 11, 2009 : Bizzia - News, information and opinions about the world of business from inside the blogosphere.

Sat, 11 Apr 2009 09:24:19 +0000

[...] Newt Gingrich praised the Financial Accounting Standards Board for relaxing the mark-to-market rules. [...]

By: Miki

Miki — Fri, 02 Jan 2009 23:30:18 +0000

Aleksandar, I’m not saying the borrowing is smart or the right way to handle things. But for the last several generations people have been taught by example to look at the payments and if they could make them based on BEST case analysis then it was OK to buy whatever.

But bad as “our” fiscal responsibility is, “theirs” is far worse. ‘Theirs’ being our political and business so-called leaders. And ‘us’ or ‘them’, practically nobody does worst case analysis these days and when it is done no one wants to listen.

Yes, in a perfect world individuals would be financially literate and fiscally responsible, but we’re a long way from perfect. People follow the leaders and the leaders are fiscally irresponsible.

So what do you fix first, the chicken or the egg?

By: Aleksandar M. Velkoski

Aleksandar M. Velkoski — Fri, 02 Jan 2009 15:41:13 +0000

Well, we can agree to disagree then.We can do that sometimes :-) Let me say this Miki: I, by no means, am perfect. I’ve been just as fiscally irresponsible as many others out there.My point is that there is a HUGE problem in buying a Mercedes IF you can’t afford it. Same with a $500k house (just a random number – pick $200k or even less if you would like). This goes for other items too. If you can’t afford it, you shouldn’t buy it. And, the same applies to government.We are in the situation we are in today (partly)because of artificial wealth. People, including myself, over extended themselves (this includes with credit cards) and made purchases on the premis of wealth that wasn’t truly there. All I’m doing is stating what I’ve learned through experience – cause I’ve been there and done that too. And, its not good for us as individuals and its not good for our nation.We can’t afford to just continue to borrow more and more money. Makes no sense (at least to me).

By: Miki

Miki — Fri, 02 Jan 2009 00:30:23 +0000

Aleksanedar, the only problem I see in your example is the credit card debt.

Home value is a function of supply and demand, so I don’t judge homes based on dollar cost. $500K barely buys a tract type starter home in the Bay Area, but it buys a mini mansion where I live now. And I see no problem owning a Mercedes if that is what you want.

I still believe that if each of us cleaned up our OWN act in our OWN way then part of the problem wold be solved.

My apologies, but I am tired of sweeping statements that people can nod sagely over, but believe don’t apply to them because the numbers in the examples are so high.

Personal financial management should be a required course in high school, but that isn’t going to happen any time soon.

Short term thinking has been the motto for our ‘leaders’ in government, business and religious roles, so why would you expect anything different in individuals?

By: Aleksandar M. Velkoski

Aleksandar M. Velkoski — Thu, 01 Jan 2009 18:03:00 +0000

I partly agree with Miki’s analysis. We, as individuals, need to rethink the way we spend and save. There is too much artificial wealth in the United States. You have people that drive a Benz and live in a $500,000 home yet make $70,000 (or less) a year and have $100,000 in credit card debt. That’s not wealth. Not only do individuals need to rethink the way they spend and save, but our government needs to do the same. Our nation is artificially wealthy in the same manner that our people are. We all need to wise up and we need to do it fast.

By: Miki

Miki — Wed, 31 Dec 2008 20:18:03 +0000

HI Lela, I know less econ than you, so I’m guessing here, but I think that there is a domino effect that when the banks lower the value of assets they have to increase reserves, which would have set up a vicious circle.

But I believe that what people really need to understand is not what the financial institutions did, since we really don’t have much control on stopping them from doing something similar in the future, but what they personally need to do to put their own house in order.

None of us can control what others, especially others doing esoteric financial transactions, do when we, and worse they, don’t really understand them.

So we need to act where we do have control and that is ourselves—although it’s much more comfortable to have others shoulder the responsibility:)