Mark to market accounting is a game changer in a game that needs some changing. Issue is though; it's the game that needs changing, and not the rules. While it may become the world's dullest spectator sport, the humble accountant and his slate grey world may deserve greater scrutiny. Watching paint dry — closely — will go a long way towards sorting out the tangled financial web we have weaved.
Accounting practice in the United States has ceased to be the studied art of financial fact it once was, turning accountants into reluctant magicians and unwilling partners in a national fraud. Thick, glossy annual reports are now nothing more than a Potemkin village of fake facades, masking the wretched and dismal condition of once healthy facts, reduced to the fraudulent math of desperate times.
Liars can figure...and figures can lie. A witty old saw that happens to have some truth to it. It is however, neither witty nor old when it comes to the modern deformity called accounting, where lying figurers have made the ancient practice of accounting for ones transactions a thoroughly contact sport.
A thousand fathoms deep below every earth moving financial headline, there lies the practice of accounting, a practice that is bent and twisted in every changing wind, continuously poured from beaker to beaker in a willing attempt at placating every egregious whim of the moment. A complex and mysterious alchemy to most, changes in accounting - however significant - shake the foundations of the semantics of the profession, unbeknownst to an unwitting public who has come to depend on simple words at the expense of the changing meanings beneath them.
The accounting profession polices itself, and does so through a series of administrative boards that makes the rules - and changes them from time to time. In the United States, that body is the Financial Accounting Standards Board, a part of the Securities and Exchange Commission. However, the FASB is subject to pressure from Washington, and has, over time, become a willing accomplice in the great game of pushing the beast forward - keeping the growing economy growing, regardless of the facts. The FASB has been quietly changing the rules of accounting, allowing reporting companies ever increasing leeway in how they report their numbers.
In the United States, there is a long history of changing the math to hide the results. John F Kennedy changed unemployment reporting rules for himself when he legislated the removal of "discouraged workers" from unemployment figures. By removing from view the legions of decent folks simply beaten down by their circumstance, Kennedy was able to provide for his successors a way to underestimate actual levels of unemployment, putting a much rosier picture on an investment in America than actually exists. Current unemployment of about 9% masks the reality that not a generation earlier that number would be 14% — not a small rounding difference at all, where decimal points are whole communities.