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"An appeaser is one who feeds a crocodile, hoping it will eat him last."
Sir Winston Churchill

9.30.2008

How To Fix the Credit Markets Without Spending A Dime

Eliminate "mark-to-market", the government accounting scheme which caused this crisis.

The cause of this crisis is very simple---at the same time the government demanded that banks make risky mortgage loans to people whose ability to pay them back was highly questionable thanks to government support for racial politics, the government also demanded that risky assets be accounted for in such a way as to make them look very bad on the balance sheet. Since these companies are required to keep money on hand to cover balance sheet losses, this had the impact of drying up money available for them to lend out.

Changing the way in which these assets are counted on the balance sheet to what it was just a few years ago would free up significant money in the credit markets. And it would do it without raping the taxpayer or setting up another permanent bureaucracy to create additional unnecessary disturbances in the finance industry.

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