Iron Curtain

This wouldn't be the first time
Things have gone astray
Now you've thrown it all away
--Bryan Adams

To top off a wild week, perhaps the craziest thing I saw was Friday's proposal to permit managers to revalue Level I assets perceived as 'wrongly' mispriced by the market.

A Level I asset is one that trades routinely, such that representative prices are regularly available. General Electric stock (GE), for example, whose 10 billion share float trades nearly 50 million shares daily, is a Level I asset. If you owned 100 shares of GE, the value of your position would be $3382 as of market close on Friday (100*$33.82 closing share price). Simple.

Let's say that you disagreed with the market's current price of a GE share. Instead, you think it should be worth $50/share. Essentially, this new proposal would allow you to 'legally' revalue your GE position to $5000 (100*50).

And so we have it--a government sponsored proposal for the mark-to-fantasy balance sheet.

"Pay no attential to that man behind the curtain..."

no positions