Tuesday :: May 5, 2009

Citizen Stress Test

by paradox

Looking over the semi-amusing folly of the Federal Reserve and its “stress test” evolution this morning I was surprised to realize that here indeed was something new in the political and accounting world, the stress test, well hell that flew in under my radar all these years. Last I heard there were generally accepted accounting principles, alleged professionals used them to produce a fairly simple empirical result: a company had money or it didn’t. Assets and liabilities, cash and loans, bust or flush.

Ah, I must’ve missed the “stress” classification of monetary status, too much stress must be as bad as no cash to pay loans, I guess, goddamnit that grad school accounting professor promised the unholy ass-kicking he gave us would pay off ‘cause no chump could fool us with vague terms or hazy concepts. Great, I just love the way education came through there.

Snark aside, it really is time to step back a bit and call the horseshit of New Accounting Stress Test being dangled before us all. All of the companies being tested, so far as I know, are public, their accounting and results have to be published every year, just what in the hell is the problem here, are they bust or solvent?

Apparently the answer is “stressed.” Meaning busted, many of them, most of them, there truly is no way to tell from the press reports. Apparently in the 21st century accounting and mathematics for a public company can’t deliver an answer, just “stress.”

I’m sure if the Treasury gods ever deigned to sneer at us with an explanation of whatever these tests measure that it’s complicated, values on many variables are fluid, they change daily with interconnected market rates which have an effect on derivatives, which no one can actually quantify. Get it? That must be why the new “stress” monetary classification came into being for the new century, these days accountants can’t actually come up with a number, go figure. So we get “stress” and “tests.” Hmm.

Then we get the fun news the test results are being leaked. It’s an accepted practice in the sickening cheesy profession of “journalism” but it still creases me sideways every time I see it, all it means from a story is that the reporter and paper participating are infuriating ass-kissing enablers pocketing cash to lie to me. Yet the “news” is passed on as legitimate and public officials continue to do it, just like Condi Rice and Dick Cheney used to.

One more time: it’s completely possible to tell the truth without hiding behind scurrilous anonymity. Every time it’s performed the disgrace of US “journalism” grows, if that were somehow possible, and the reported and paper are trusted less, somehow, what fine reputations our journalists have these days.

In these leaks of reeking unprofessionalism are rumors companies are negotiating with Treasury for the results of the tests. It’s completely plausible, since most of Treasury used to work for the companies being tested.

Warren Buffet said he wouldn’t look at the stress test results, what could they mean to him? He’d buy stock in the companies being tested that he’s so massively exposed to, of course he would.

As for me, well, I’m off to re-study my accounting and economics to get a much better handle on the classification of Stress. Surely there must be indexes, ratios and co-efficients related to solvency and stress that I don’t know about. Right? I mean, flush or bust, solvent or insolvent, viable or bankrupt, how quaintly old school. Professionally applied generally accepted accounting principles? Ha. Go ahead, Treasury, I’ll figure it out real quick, I’m sure, then you can stress me with those tests. I’m positive it will work extremely well.

paradox :: 4:44 AM :: Comments (10) :: Digg It!