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<p>[QUOTE=&quot;yakpoo, post: 1662152, member: 18157&quot;]WHOA!! Juan...take a pill!&nbsp; :grandpa:</p><p><br /></p><p>First off, the markets turned just one (1) week before FAS-157b was adopted (insider trading, no doubt). I was one of the first (#21) respondents to the RFC that created FAS-157b...I know what I&#039;m talking about (on this subject, anyway).</p><p><br /></p><p>Yes, we needed something other than Mark-to-Price. Mark-to-Price didn&#039;t reflect changing market conditions. However, the FASB fell in love with their &quot;elegant&quot; Mark-to-Market algorithm :5hearts:and didn&#039;t perform a robust use-case analysis. Basically, they never considered what would happen if markets behaved in an inefficient manner; they never considered how the Mark-to-Market rule would value an asset in an <i><b>inactive </b></i>market.</p><p><br /></p><p>Sally-Mae and Freddy-Mac &quot;securitized&quot; mortgages into pools (or Tranches) and no one could effectively determine which mortgages were in which Tranch. Banks bought shares of these tranches...or Collateralize Debt Obligations (CDO&#039;s) and used them as capital to back new loans. When the housing bubble burst, no one knew how to value the CDOs so the Mark-to-Market rule drove their values to zero (0). Net result...banks were forbidden to lend new money until they could meet capital requirements. </p><p><br /></p><p>Note: Had CDOs been valued Mark-to-Cashflow (like bonds), none of this mess would have happened.</p><p><br /></p><p>The velocity of money came to a screeching halt and markets around the world began to tank. Sure, there were other factors that created this mess...but the Mark-to-Market rule magnified a small problem and caused financial markets around the world to seize up. Once FAS-157b was adopted &quot;Valuing Assets in an Inactive Market&quot; money began flowing again...and stock markets (artificially driven to their knees) rebounded.</p><p><br /></p><p>Anyway...I love owning &quot;numismatic&quot; PMs (10%...maybe)...but it&#039;s ridiculous to stock up on PMs in the &quot;hope&quot; that the world will end...that&#039;s just nuts! :goofer:[/QUOTE]</p><p><br /></p>

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