The World According to Michael

 One has to wonder why the stock market crash ended so abruptly.  Near the end 2008 the market completely melted down and a few months later suddenly started to move upwards and has been doing so since the spring of 2009.  Now we have to ask ourselves what was the catalyst for this change in market direction.  Was it the newly elected President Barack Obama?  His magical droning of hope and change?  In a word, NO!  Although, during the election time the Media glossed over and skewed very important information as to what was really happening.  This being the biggest financial fraud in world history and it continues today.

During the meltdown large banks and corporations were on the verge of collapsing under the weight of the very financial instruments they created.  We watched as many of the banks collapsed within weeks.  Bear Stearns, Lehman Brothers, Indymac to name a few.  It was a stark realization for "the powers that be" that the system was literally within weeks if not days from totally collapsing.  One thing I kept hearing from the background of financial news broadcasts and & few financial publications was a faint whisper of this "Mark to Market" rule.  This whisper became a raging roar by the time Obama took office.  

The MTM (Mark-to-Market) rule forced banks to continually adjust their books to allow their assets/liabilities to be adjusted to at current "fair market" price.  Simply stated, if the banks had an asset that was worth $10Billion in 2007 and worth $4Billion in 2008 they would have to "Mark" the price adjustment into their books as "Current Market Value"  This also works in reverse, if that $10Billion asset tripled in value then the banks got to reap the newly adjusted $30Billion price tag.  Obviously when the market was crashing, this rule was devastating to most of the banks.  Much like the homeowners that purchased their homes at the height of the bubble, just to watch the value plummet into the toilet overnight.  

So this begs the question.  If the grossly inflated prices of the banks "assets" over the last decade are truly worth 50-75% less than their peak value, then why shouldn't they have to account for that loss?  If a homeowner has a $500k mortgage on a house that is truly worth only $200K, they have to take the hit at "current market value".  Hence the flood of foreclosures, bankruptcies and unemployment.  Now, this is where things get interesting.

In early spring of 2009 the Obama administration changed the rules of the game to the big banks & corporations. They (Financial Accounting Standards Board) lifted the MTM (Mark-to-Market) rule.  The suspension of the MTM rule allowed banks to set the value of these toxic assets to their highest possible worth.  Even though the "real" market value of these assets are worth only 25-50% of their newly stated values.  In fact the banks don't have to quantify the value of these assets at all.  Sounds a bit like Enron doesn't it?