best quote ever

Okay, maybe not:

"To be frank, it has been frustrating to try to assess that viability when the value of an asset is based on the nature of its acquisition rather than the way in which it is managed or the way in which its economic value is likely to be realized."

Elizabeth Duke, a Fed Governor. Here's the whole thing:

http://www.federalreserve.gov/newsevents/speech/duke20090914a.htm

h/t Calculated Risk

That is an _awesomely_ wonderful quote. She is using it in a particular context (she's a regulator), but it is soooooooo true about damn near everyone in the financial community and as an investor it drives me fucking bananas.

ETA: I'm going to try to translate that into words of few syllables:

Sucks to judge by the price paid, instead of how well it is run or what it might earn.

As much as I prefer anglo-saxon roots to latinate ones, I still like the way she said it better.

ETAYA: CR's commentary is, as usual, limited, which is fine; at least he pointed to the speech and quoted it extensively. Where he summarizes Duke advocated two different valuations depending on whether the asset was acquired with intent to trade vs. hold and collect, he loses Duke's fine-tuning on what needs to be regulated (don't let people move stuff from one category to the other at will). Most of the speech is about the stress test -- a more detailed and informative description than I had previously read, particularly where it goes into details about how mergers lost transparency, especially in the wake of some regulatory changes, and how that poses problems for regulators and investors and others going forward.

STILL MORE: I can stop. Really, I can. But you should go read this speech. It is _good_ and it is important. Which regulatory approach we take (make 'em mark-to-market vs. make 'em treat as hold-to-maturity or not depending on the character of the security) has the potential to reshape _what_ the financial industry does over time. Want a world in which everything is worth what it's worth right at that second? That's FASB, a world of day-traders and investment bankers. Yuck.

MY LAST COMMENT I SWEAR: Altho the last bits worry me. Don't we sometimes _want_ to limit the free flow of credit?

accounting and railroads

etd.lib.ttu.edu/theses/available/etd.../31295015073918.pdf

I _was_ going to go off on a big rant about how the railroads sort of invented accounting, but simultaneously perverted it as part of stock manipulations that historians are really screwed as a result and eventually railroads got regulated almost out of business, but then I thought, you know, I bet someone else has said this much more effectively elsewhere.

Sure enough.

Note: I don't think regulation is bad, any more than I think accounting is bad. But you can warp accounting to take suckers to the cleaners, and you can use regulation punitively to reduce the power of people who are otherwise taking horrible advantage. I get that when you want to build infrastructure, and you know perfectly well you can't get the subscription through honest representation, you might want to con a lot of small investors to get them to pay for the road. And I get that when you're dealing with railroads in the mid- to late-teens, you might feel compelled to really lean on 'em hard in order to stop them from crushing the workers down to the point where communism looked like a much better deal than capitalism.

But geez. There comes a time when you should listen to them crying uncle.

ETA: I knew it! I fucking knew it! R. is _wrong wrong wrong_! But in his favor, everyone agreed with him for _decades_ before they fixed it. As soon as I found out about the lack of depreciation on track (hell, on rolling stock, but they did fix that), I _knew_ that was the meat of the nut.

http://www.accessmylibrary.com/article-1G1-164636310/end-betterment-accounting-study.html

[Edited to fix typo: RRB] accounting is _stupid_. If something lasts so damn long it messes with the schedules you assembled for, oh, I don't know, coal power plants, or flour mills or widget factories, then you _invent a different schedule_. You do _not_ pretend that track is eternal. Fuck!

I am actually have trouble believing just how _evil_ ICC was to railroads. I mean, yeah, sure, the rail barons deserved it, but enough with the kicking the dead and rotting corpse.

STILL MORE: I am disturbed by this whole thing, tho. Here I am _happy_ that Reagan's tax revision did at least _something_ worthwhile. But it isn't _deregulation_ that I'm in favor of here. Adjusting regulation isn't bad.

you know your sick child might be feeling better when..

(1) He starts talking again (I mean, to the degree he ever does). When I rode up on the bike, T. was in the play area. I waved and he told his aide, "Want mama!" Very clear!

(2) He won't take his bike helmet off upon arriving home, but instead wants to go out again immediately. So we did, altho I did get us some beverages.

(3) We go to the park, where he plays on the slide, the swings and the fire engine themed climber. For about 40 minutes, at which point he went looking for the bike.

(4) Upon arriving home (taking off bike helmet, shoes, lying down in driveway), he decides it's time to go ride his own bike, so off we went for a 2+ mile ramble around the subdivision, doing the big loop including the funeral home and the church.

His nose is running, and so was he. I am now tired.

Fortunately, after all that, he was willing to go inside briefly, altho he did want to be picked up and thrown on the couch a few times.