Atlas Shrugged: The Mocking

Thursday, October 16, 2008

Megan Discusses Regulation

Megan McArdle's meltdown continues apace, as McArdle warns us against regulation, again. For her first warning, McArdle pulls out a strawman puppet, sets it on her knee, and has it spout a dire warning towards imaginary people lusting for revenge against the cruel, greedy capitalist bankers.

Her second warning is that regulation can do more damage than good, and gives mark-to-market accounting as an example. Mark-to-market forces transparency on businesses, which is desirable because the credit freeze is largely caused by the mistrust banks feel towards each other right now. Nobody knows exactly how much banks have lost, and how much money they have left. Not everyone thinks mark-to-market is bad at this point. Via Calculated Risk:

"Suspending mark-to-market accounting, in essence, suspends reality."Beth
Brooke, global vice chair at Ernst & Young LLP, WSJ, Sept 30,
2008


"Blaming fair-value accounting for the credit crisis is a lot like going to
a doctor for a diagnosis and then blaming him for telling you that you are
sick."analyst Dane Mott, JPMorgan Chase & Co., Bloomberg

"Suspending the mark-to-market prices is the most irresponsible thing to
do. Accounting does not make corporate earnings or balance sheets more volatile.
Accounting just increases the transparency of volatility in earnings."Diane
Garnick, Invesco Ltd., Bloomberg

But hey, Megan's been right so far, she's probably right here too.

3 comments:

Anonymous said...

"...since 540 legislators all want a piece of the action."

Where'd she get the "540" number?

Susan of Texas said...

According to "Contacting the Congress, there are 540 legislators. (I had to look it up.)

Anonymous said...

Stupid me. It was 535 back in my school days. My bad for not checking if things had changed since then.