patrick.net

I'm much more concerned about the Ninety-seven percent of the $133 million of deferred interest outstanding came from loans with balances above the original principal amounts,

than the and the company generated 62% of its profits from noncash income from deferred interest.”

Noncash net-income is not uncommon for this industry, especially because of the complex GAAP rules surrounding interest expenses and deferrals. To make matters worse, this is an area where tax law diverges from GAAP so there is a whole tax-effect thing going on. I'd like to know how this falls out for EBT and EBITDA measures (but I'm too lazy to do it myself right now).

I wouldn't be surprised to see a FAS revising how revenue is booked for things like negative amortized loans or other instruments where the principal can rise higher than the original balance. The accounting numbers aren't capturing the risks of revenue collection. However, keep in mind that it may not be the fault of the companies which are reporting these numbers. It may be a direct failure of the convoluted GAAP rules everyone tries in vain to follow. The FASB has been on a revenue accounting obsession for many years now, and the rules are worse than a Goldberg machine.

I do not understand all of the fancy numbers

It may be a direct failure of the convoluted GAAP rules everyone tries in vain to follow. The FASB has been on a revenue accounting obsession for many years now, and the rules are worse than a Goldberg machine.

Point taken. Of course, we can all look to our government's wonderful "Rube Goldberg Tax Code" for setting a fine example.

This smells very much like the revenue-booking shenanigans we used to see in the dot.com days.

I have the same feeling.

“Everybody wins, heh heh, at least everybody who is in this room, what? Har har.”

Not even that, only "the smartest guys in the room". :)

Hmmm... can't tell if "SoftestLanding" is a real troll, or tongue-in-cheek poster pretending to be a troll.

pretending to be a troll

Huh? Trolling the troll?

ps:

My wife was a software revenue recognition auditor with a big 6/5 (and a bit of a recognized expert in the field, to toot her horn a bit) during that era. A bulk of the FAS' that have come out in the years during and since have been specifically designed to quash that sort of thing. Companies that do anything like that today are committing outright accounting fraud.

The problem now is often the opposite: firms can follow all the revenue rules strictly and get away with things hiding in the "unintended consequences" holes.

No worries, what's the fuss? Nothing can happen if we have a Fed that will monetize everything. Just print more money. You think that our government will allow large-scale banking failure? What is FDIC for anyway?

Why don't we discuss what will happen AFTER the mortgage loans get monetized, that will be more interesting.

I have a question.

Apart from energy (oil, ng, uranium, etc.), and gold, silver, what other real assets are good for hoarding? How does one hoard agricultural products, esp soy and sugar? Any suggestions?

Apart from energy (oil, ng, uranium, etc.), and gold, silver, what other real assets are good for hoarding? How does one hoard agricultural products, esp soy and sugar? Any suggestions?

Consider item trading vehicles only. Nothing is really good for hoarding.

Not investment advice

Well, the money has to come from somewhere, Fed is the ultimate backer.

When mortgage loans go into default in a massive scale, our government won't let this drag major banks into a systematic banking failure. So count on printing money.

While NEOs (negative home owners) lose their homes, the banks will just be fine. So I am more interested to see where the extra money will go once it is pumped into the banking system through monetization of bad debt. This scenario is already played out in Japan, BOJ essentially bailed out all banks with a powered up printing machine, as suggested by our new Maestro BB.

source of protein. I like tofu.

Peter P,

I respectfully disagree.

Real assets are not trading vehicles with a looming fiat crisis. What is money for? Money is simply a denomination, where I park my unexecuted rights to exchange for something real, like a house, a loaf of bread, a car, etc. If I have a bunch of greenback which has a dwindling purchasing power, then I'd rather go back to barter exchange and hoard stuff that will keep my purchasing power.

Hence comes the soaring value of gold and silver. They are quite useless, but central banks and people like myself are hoarding them because we believe that an ounce of gold can keep its purchasing power better than a dollar printed by BB. Same thing with oil or ng, these are the backbones of our economy, not dollar, a lubricant, and an increasingly thinned down lubricant may I add.

Even compared to other fiat, dollar is losing its ground, each interest hike delivers dwindling marginal power to keep dollar strong.

I think a fiat crisis is not impossible but I am not going to position myself for one just yet.

If you are really worried you should probably own farms and guard them with militia. ;)

In the worst case scenario (e.g. nuclear war), you cannot eat gold. But corn can keep you alive just for another day of misery. :)

Homer Simpson tried to hoard sugar and bees ate it.

Hee, especially if you brew the corn into moonshine. Then it might not be so miserable.

LOL

Too funny!

In a Colombo episode, a murderer owned a vineyard and hoarded the best wines around the world. Somehow he messed up his wine cellar temperature in his act of murder and therefore spoilt all his cherished stock.

I am not quite a wine enthusiast, and I am afraid I may run the risk of turning my wine hoarding effort into a vinegar hoarding situation :-)

I am not quite a wine enthusiast, and I am afraid I may run the risk of turning my wine hoarding effort into a vinegar hoarding situation

I rather hoard lobster.

I think this might be the fastest degradation of a topic into inane food thread yet!

Wait until I talk about sushi and it will be further out of control. :)

Anyone wants to sponsor the

"Mortgage Abuse and Homeowner Protection Act"?

Can we package that with the

"Imitation Krab Disclosure Act"?

I’m not a creative enough cook to deal with 1 eggplant and 2 leeks, or some other sort of half order of vegetable.

Leek is easy. It will taste good anyway you cook it.

I hate eggplants so I cannot offer much help here.

Owneroc,

I have been hearing about ethanol lately - not sure if I am too late to the party, and hence have not taken any position. Today on MSN investor, there were 2 articles. One about ethanol and other about sugar. ADM has raliied a lot in last few months, and more after Barrons mentioned them this Saturday. Seems very expensive stock. But if trend is the friend, then there may be still some rally left.

If you brush enough olive and herbs on the eggplant and grilled it, it would be (barely) edible.

Good idea!

I prefer sauteed or poached vegetables, although I love olive oil.

Oh, and another one. Jubak wrote a nice article about (very basic info) on the lack of M3 supply number from this month onwards.

http://moneycentral.msn.com/content/P146592.asp

How about an "MSG Prohibition Act"?