That is: we are told that the real culprit in the current financial uproar is not lunatic lending, bubble economics, greed, panic, narcissism, what-have-you. No: it is the mark-to-market accounting rule that requires the bankers to mark their securities (down) to current market prices.
As Gross points out, mark-to-market is always a tricky business, a costly-tradeoff at best (except when you are dealing with stuff regularly traded on exchanges, like hog bellies or shares of stock). But this isn’t quite the argument the fussbudgets are making. They are not saying that mark-to-market is impossible, so much as that the “known” prices don’t represent “real” values.
Ha! Well, a couple of points. First, recall that this is the argument of every debtor in extremis—if only my creditors will be patient, if only I can have a little more time, if only if only yadda yadda.
“Hey! Three wishes!” as the lobster says on his way into the pot. “Four! Five! How many wishes you want?” The debtor always believes that something will turn up. Funny thing is, sometimes he is right. The skill of a good investor is to be able to sort out the signals from the noise, to know a good deal when they see one, and not to be distracted by the monentary trampling of the herd.
The reason all this is so comical is in this case is the source: the current round of bleating emits from the very highest of high priests of hairy-chested free market orthodoxy: Steve Forbes, and Paul Craig Roberts and others of their ilk—the guy who have never in their life seen a market price they didn’t like until now when it is their ankle that gets the bite.
Note: I don’t mean to criticize Gross here, who is clearly in on the joke, although I do think he lets them off rather easy: there are some situations where sneering mockery is the only suitable response.
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