If you want me to explain my position, I will:

Wall Street banks are highly leveraged; equity represents a tiny fraction of assets; if the large positions they take move against them, their equity can literally be wiped out overnight

they tend to avoid writedowns as long as possible; therefore, the true value of the company is hard to determine, wall street banks are opaque, investors are unable to gauge what's truely going on, especially in a time of crisis like the days here.

Does the balance sheet go into detail about which positions the bank has taken?  does it go into detail about which securities it holds?

Your argument that you can look at a balance sheet and tell if a bank will survive is clearly wrong; which is why Merrill Lynch was actively looking for a buyer and beat Lehman Brothers to the punch

I assume that you would know at least the basics of how wall street banks operate if you choose to debate. I was wrong.

and fyi,

you've been formally warned at least twice and warned informally many times more than that

you've lied in your signature, which you were warned about

you said that all businesses acquisitions are good decisions; anyone with any knowledge of AOL/Time Warner can see that it is wrong

Post edited at 6:40 pm on Sep. 19, 2008 by yankeefan

---

We are not talking about balance sheets in general, we're talking about wall street banks, specifically Merrill Lynch. You haven't made a single relevant argument.

---

Incorrect again. You have been reported for lying. I have already argued why B/S in general are important. You have given nothing but insults on why they aren't.

---

If you want me to explain my position, I will:

---

About time. All you did previously was insult me.  

---

Wall Street banks are highly leveraged; equity represents a tiny fraction of assets; if the large positions they take move against them, their equity can literally be wiped out overnight

---

That doesn't make sense. While they are highly leveraged, they hold billions in assets. AIG has over a trillion in assets. The issue is more of timing rather then the standard accounting question. AIG needed a bridge loan of a mere $14.5 billion to met their obligations. No one would give it to them. If they had, they could meet their short term obligations and sell off assets. No problem with a trillion in assets. The issue is timing not the problems on the balance sheet.  

Furthermore, their positions are hardly what you say they are. While it is true that large amounts of their assets (equity is not the same as assets, learn your accounting) could turn against them overnight, that hasn't been the case. Write downs have been occurring since July 2007.  

---

they tend to avoid writedowns as long as possible; therefore, the true value of the company is hard to determine, wall street banks are opaque, investors are unable to gauge what's truely going on, especially in a time of crisis like the days here.

---

That doesn't follow. Level 3 assets aren't that large as people make them out be. People were dumping AIG despite its incredibly small amount of Level 3s. And write downs have been again occurring for over a year. Contrary to your belief, auditors have been forcing companies to evaluate their assets based on fair value and Sarbanes Oxley has put CEOs in direct fire for faulty statements. Therefore the B/S are even more opaque then they used to be. Even if the Level 3s weren't correct evaluated, the other aspects of investment bank's balance sheets are. They hold and held trillions in Level 1 and Level 2 assets, easily evaluated. You are incorrect assuming that Level 3s make up the majority of the balance sheet. That is simply not true. The massive selling off of stocks has caused firms to write down their own trading stock causing charges to their incomes that are in reality fictitious. They aren't losing money from that, but the GAAP rules require it.  

You've turned a molehill into Everest without an understanding of the situation, accounting or financial statements. Furthermore, you haven't explained why anything I've said is false. Why can't you compute most of the ratios off their B/S? Why not?  

---

Does the balance sheet go into detail about which positions the bank has taken?  does it go into detail about which securities it holds?

---

It's called disclosures. They are included in every public company's Financial Statements. How can you claim B/S are worthless without knowing what a disclosure is?  

---

Your argument that you can look at a balance sheet and tell if a bank will survive is clearly wrong; which is why Merrill Lynch was actively looking for a buyer and beat Lehman Brothers to the punch

---

Because they have liquidity issues. AIG probably could have earned its way out of the problem. I suggest you go to www.brandes.com and read their white papers. ML was looking for a buyer because it needed short term cash. That can be seen on their quarterly reports. Lehman brothers had different issues.  

---

I assume that you would know at least the basics of how wall street banks operate if you choose to debate. I was wrong.

---

Read the above. You clearly have egg on your face.  

---

you've been formally warned at least twice and warned informally many times more than that  

you've lied in your signature, which you were warned about

---

Actually I received no warnings in the past month, you can ask the mods about this. I did have a conversation about why you are being the troll though.  

---

you said that all businesses acquisitions are good decisions; anyone with any knowledge of AOL/Time Warner can see that it is wrong

---

You have been reported for lying. I never argued that all acquisitions are good decisions. I stated that companies buy one another because they perceive value. I never said that it always results in value. You again have been reported for lying. I'd love to watch you get banned for lying. Every single infraction you commit against me will be promptly reported.

Post edited at 7:05 pm on Sep. 19, 2008 by obvious child

-------
"I give the probability of this working at zero" - Dan DeMatteo

---

That doesn't make sense. While they are highly leveraged, they hold billions in assets. AIG has over a trillion in assets. The issue is more of timing rather then the standard accounting question. AIG needed a bridge loan of a mere $14.5 billion to met their obligations. No one would give it to them. If they had, they could meet their short term obligations and sell off assets. No problem with a trillion in assets. The issue is timing not the problems on the balance sheet.

---

IRRELEVANT.

The real issue is balance sheets and solvency.  Saying that they just need cash and nobody would give it to them is ridiculous.  If every company can get bridge loans of billions of dollars at any time, they wouldn't go bankrupt; they can infinitely pile debt upon debt.

---

Furthermore, their positions are hardly what you say they are. While it is true that large amounts of their assets (equity is not the same as assets, learn your accounting) could turn against them overnight, that hasn't been the case. Write downs have been occurring since July 2007.

---

I was talking about equity being wiped out, not assets being wiped out.  The fact that you're putting words in my mouth proves again that you're a liar.  

Writedowns have been occuring but the securities are still not reported at what they're truly worth.  That's why writedowns are still happening today.

---

That doesn't follow. Level 3 assets aren't that large as people make them out be. People were dumping AIG despite its incredibly small amount of Level 3s. And write downs have been again occurring for over a year. Contrary to your belief, auditors have been forcing companies to evaluate their assets based on fair value and Sarbanes Oxley has put CEOs in direct fire for faulty statements. Therefore the B/S are even more opaque then they used to be. Even if the Level 3s weren't correct evaluated, the other aspects of investment bank's balance sheets are. They hold and held trillions in Level 1 and Level 2 assets, easily evaluated. You are incorrect assuming that Level 3s make up the majority of the balance sheet. That is simply not true. The massive selling off of stocks has caused firms to write down their own trading stock causing charges to their incomes that are in reality fictitious. They aren't losing money from that, but the GAAP rules require it.

---

That's the entire point.  Thank you for admitting you're wrong; next time just come out and say it.

---

You've turned a molehill into Everest without an understanding of the situation, accounting or financial statements. Furthermore, you haven't explained why anything I've said is false. Why can't you compute most of the ratios off their B/S? Why not?

---

did you not read my posts about balance sheets being irrelevant?

---

It's called disclosures. They are included in every public company's Financial Statements. How can you claim B/S are worthless without knowing what a disclosure is?

---

irrelevant.  You just provided a balance sheet, no disclosures.

---

Because they have liquidity issues. AIG probably could have earned its way out of the problem. I suggest you go to www.brandes.com and read their white papers. ML was looking for a buyer because it needed short term cash. That can be seen on their quarterly reports. Lehman brothers had different issues.

---

see above on liquidity and solvency

that is how companies go under, they don't have cash.  that's the exact point.

that's why you can't look at a balance sheet and say that they'll survive.  Why you can't admit this is beyond me.

---

Read the above. You clearly have egg on your face.

---

Read above.  you're wrong as usual.

---

LOLZPRAT Yankeeface can't read English.....

---

I'm starting to agree with you.

He clearly given his responses, did not understand what I wrote.

-------
"I give the probability of this working at zero" - Dan DeMatteo

this is just another example of your dishonesty

do better.

---

not my fault you can't focus on solvency and balance sheets; you specifically cited disclosures and specific classes of assets when that is irrelevant to the discussion

this is just another example of your dishonesty

do better.

---

---

You are one to talk.

---

Especially since that was what I was talking about. Anyways, it's pretty clear that Yank latched on to my use of opaque verse transparent without understanding everything else I stated. True, I used the wrong term, but in the context of everything I wrote, it's pretty obvious I used the wrong term. Yank however, due to his lack of reading comprehension for whatever reason, looked at essentially one word and assumed whatever he wanted about the rest.

-------
"I give the probability of this working at zero" - Dan DeMatteo

you specifically stated balance sheets but then cited other financial statements and disclosures

the topic is specifically on insolvency and yet you're talking about short term illiquidity vs. long term viability

you have completely missed the point of the debate

try again when you know what you're talking about