Do accounting changes make economic changes?

This seems like old non-news to me, but here is an article on Bloomberg regarding AIG's credit default swaps and the ongoing risks of such things.  

An excerpt:

The $192.6 billion figure for the swaps is comprised mostly of $99.4 billion tied to corporate loans and $90.2 billion linked to prime residential mortgages, the insurer said in a May 7 filing. The combined total was reduced from $234.4 billion on Dec. 31.

Most of the home loans tied to the European swaps are first-lien mortgages for owner-occupied properties, the insurer said in March. The other transactions include secured and unsecured corporate loans.

The fair value of the derivative liability was $393 million as of March 31, compared with $379 million on Dec. 31, according to AIG filings.

But I think the new news part of it has to do do with the reclassifying of the reporting of these securities as "risks".  I could be wrong as the article is a bit shy on nitty-gritty-detail.  Missmc is confused because the last she heard on the topic was that the diminished value of these securities did not have to be accounted for as losses by the banks if they were held to maturity.  And that might be why Citigroup is still alive.  Murky murky murky complex changes.  Do accounting changes make economic changes?

When the loss is lost (but you can't say that), it is risk.  It does all make sense, but, only theoretically. 

The right way out...

Here is a fantastic letter in the New York Times entitled "Dear AIG, I Quit"...

Re-abstracting the Landscape

Corporate identity of financial institutions is undergoing a flux, to put it mildly.  Corporate identity in days of old was guided by the advertising industry and the field of logo design.  The news now has the upper hand, and, the abstraction of corporate identity runs past those little logos.  A sour pill has sullied the icons of the day.

Citigroup lost (actually, sold) its red umbrella sometime in 2007 and adopted the red arc which now reads as a red (dangerous) small bridge.  AIG has no little corporate abstraction, it stands with its initials.  If pronounced as a word -- "aig" - well, it rhymes with gag and brings to mind a kind of choking yelling noise.  Bank of America has an American flag as landscape, farmer fields on a distinctive curve as it viewed from above, perhaps a corporate jet.  RBS has a geometric tesselation that would make a fine wallpaper - arrows pointing inward to a blank circle...the emptyness of the inside does not read well these days either.

Redesign ideas?  An abstract metamorphosis of these logos will no doubt be coming soon. Colourwise, Missmc recommends out with the red and in with the green.  What else?  American references need to be avoided for a while.  Fonts?  They must get serious.  Times-Roman or something nostalgic.  Perhaps most importantly, all these institutions need to be renamed before they are re-logo'd.  I can see you all smirking with venomous ideas.  Stop that!

Google Street View

Missmarketcrash has frittered a good part of the morning away looking at the just-launched London version of  Google Street View.  Here is Missmarketcrash's local high street and the line outside the local butcher shop.  A bit dull compared to the image of the puking man and his friend with reindeer antlers that has been making the rounds.  Most of Dulwich has been re-classified as Camberwell by Google street view.  I can hear the locals fainting.  Maybe it is just a reflection of where property prices are headed. 

I ought to be chatting about AIG, bonuses and retroactive taxes, but, it is a philosophical tangle on many levels.  I will say that anger is a weird thing.  If we are collectively in some kind of emotional process in digesting the current economic crisis, anger is one of those things to move forward and beyond.  Missmc has a bit of a plexiglass screen up on the emotional side and is trying to address things purely on an intellectual level.  With that, the examination of human reaction in the media is a topic I am willing to tackle.  After watching Obama on Jay Leno last night, I can say that what works well on the emotional side for people is good comedic timing.

With that, here is the puking man and his reindeer friend.

And now, back to the cricket...

When the BBC actually mentions the stock market, you know it must be horrid. In general, one would never actually know there is a stock market anywhere in the world if your news source was limited to BBC online. It is actually a refreshing thing not to have it considered part of one's daily life.  Today, "Stocks plunge on Financial Fears" is planted in the dot-center. I do remember tuning into the BBC news one evening last year on one of the larger plunge days to hear the market news. They said, "Markets are down across the world. And now, the sports news." Or something to that effect.

When London had bombings a few years ago, much the same happened. "Bombs have gone off in several London locations. And now, back to the cricket".

So, with the market news front and center, what is a girl to think? Clearly, it is time to think about cricket. Or, tennis, or Dylan Thomas, or fashion.

On a day when most of the world markets are down between 4-6%, AIG is up.  On that note, back to the cricket...

Tis the season...

Everyone has a Christmas memory that floats up with good feeling every year. For Missmarketcrash, that feeling has always been looking forward to doing a bit of charity. Bringing in canned goods, making crafts to sell, all the lovely smells of Christmas are consistently haunted by that smell of the elderly pee in the nursing home...

With all the charitable donations the U.S. government seems to be making - to the cars, to citibank, and, now, to GMAC and so on - the spirit of giving continues.

The Queen has just delivered her annual Christmas speech and seems to be on the same tangent as the American Government. Let's push Missmarketcrash's irony aside for a moment and remember...time, clothing, money, even good cheer -- whatever you've a bit extra of...donate a little for charity -the giving will bring you merriment.