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"The most disastrous Bush policy that Mr. Obama is perpetuating is mark-to-market or 'fair value' accounting for banks, insurance companies and other financial institutions," Forbes wrote in an opinion column.
Under mark-to-market -- the revaluation of assets to their current market value -- even non-suspect assets are being artificially knocked down in value, Forbes wrote.
"Banks and life insurance companies that have positive cash flows now find themselves in a death spiral," Forbes wrote.
Forbes said that of the more than $700 billion that financial institutions had written off, almost all of it had been book writedowns, not actual cash losses.
"Another horrific Bush policy that Mr. Obama has left untouched concerns short selling," Forbes wrote.
Forbes said the US Securities and Exchange Commission's removal in 2007 of the so-called uptick rule, which held that investors could not short a stock unless it went up in price, was responsible for an explosion in market volatility.
Obama should suspend mark-to-market accounting rules, restore the uptick rule, and enforce the prohibition against naked short-selling, Forbes wrote.
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MTM accounting is the cornerstone of IFRS, the accounting framework of the Internal accounting standard Board. THis is sought to be implemented in India from 2011 and many wise people have been questioning the MTM policy as it can create havoc in volatile times - in boom time, the artificial jacking up of value will result in huge profits in books and inrecession time, it will result in huge losses in the books. In both instances, the profits and losses are not backed by cash flows. This will be disastrous for all, since in a knwoledge economy, fancy assets such as HR assets, patents, goodwill, trademarks, brand value and all nonsense and fancy non existent assets will be valued and profits booked, exectuives will take their bonuses and quit the scene, leaving investors, lenders and regulators with red faces. The MTM accounting should be banned, not be taken into consideration for recognising profits. Hope INdia does not fallinto the trap of IFRS
When it comes to making business decisions, no American President can have his self and independent thinking. They got to follow the dictates of the muti-nationals,oil companies, the military establishments and the industrial complexes. After all it is the American policy that America should own and control 70% of the world's wealth, leave the 25% to Japan and Europe and let the poor third world countries in Asia and Africa fight wars, get involved in terrorism, enhance their diseases and figt to divide the 5% left as a charity by filthy rich. I wish communism succeeded. Look at Cuba's massive success challenging American hegemony. We in India have to learn a lot from America's secret Agenda for poorer nations.
Forbes knows nothing. Its people like him that got us in the mess we are in.The biggest Bush mistake was Iraq war, and deregulation of companies and manupulators like Forbes.Obama has done a really good thing by making banks more accountable. Look where the Bush policy has led us - into ruin. Forbes does not learn from his mistakes, instead has a set of ideals and holds on to it like a religion. Get real Forbes.
Following mark to market during boom and mark to model during recession is a head I win, tale you lose policy, which US financial sector is trying Obama to accept. If some banking assets have no takers, they have zero value and simply by concealing them you cannot show that overnight sick banks have become healthy. This is fantasy accounting, which is the culprit behind the present crisis. US financial sector is actually looking for short cut to come out of the recession. But this course is dangerous. Banks have to regain reputation by ensuring that the money lent by them generates genuine good return by production of hard goods and services, not paper profits by fabricated accounts.