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June 9, 2023

When accounting goes unaccounted for

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The JDA

The Return of Capital?

by Adrienne Gonzalez

Thumbnail image for Thumbnail image for magic money.jpgAfter last week’s talk with Sam Antar, he got me thinking about our major capital problems, reminding me of something I’d seen earlier in the year on the world running out of capital.
How is that even possible? Isn’t capital just an accounting entry?
In the April piece, it was argued that the global capital trench is not possibly large enough to cater to the budgetary debauchery of the Obama administration. The stimulus. Health care. Afghanistan. Pick one and you can easily identify where the problem lies; put them together and you realize that we are fighting an uphill battle against investor demand for risky assets – including sovereign debt. In other words, T-bills aren’t what they used to be.


So how can regulators impose stricter capital requirements when trillions in fake capital built upon fantasy accounting in the years leading up to the financial crisis was vaporized?
Credit Suisse believes new capital requirements in Europe will cost affected banks £33 billion, some of which will inevitably come from those banks’ clients.
FT Alphaville:

Indeed, one of the theories about why lending by UK banks has yet to pick up — despite the Bank of England’s QEasing efforts — is that banks have been preparing for higher capital rules just like the ones above. That rather implies there are, perhaps less expected, costs for consumers as well.
As the FSA notes in the consultation:As noted in Table 1, costs for firms will rise substantially as a result of these measures and these costs will be passed on, at least in part, to consumers. This increase may manifest itself as lower deposit returns and higher borrowing interest rates. The extent to which this occurs depends on a number of factors, including the extent to which firms may already be able to charge above competitive prices for some products.

Know what’s happening? You’ve got to pay back your share of that fake capital vaporized in the decoupling process. You borrowed against it and bought crap with it and got a raise because of it and now you’ve got to give it back.
That’s all.

Thumbnail image for Thumbnail image for magic money.jpgAfter last week’s talk with Sam Antar, he got me thinking about our major capital problems, reminding me of something I’d seen earlier in the year on the world running out of capital.
How is that even possible? Isn’t capital just an accounting entry?
In the April piece, it was argued that the global capital trench is not possibly large enough to cater to the budgetary debauchery of the Obama administration. The stimulus. Health care. Afghanistan. Pick one and you can easily identify where the problem lies; put them together and you realize that we are fighting an uphill battle against investor demand for risky assets – including sovereign debt. In other words, T-bills aren’t what they used to be.


So how can regulators impose stricter capital requirements when trillions in fake capital built upon fantasy accounting in the years leading up to the financial crisis was vaporized?
Credit Suisse believes new capital requirements in Europe will cost affected banks £33 billion, some of which will inevitably come from those banks’ clients.
FT Alphaville:

Indeed, one of the theories about why lending by UK banks has yet to pick up — despite the Bank of England’s QEasing efforts — is that banks have been preparing for higher capital rules just like the ones above. That rather implies there are, perhaps less expected, costs for consumers as well.
As the FSA notes in the consultation:As noted in Table 1, costs for firms will rise substantially as a result of these measures and these costs will be passed on, at least in part, to consumers. This increase may manifest itself as lower deposit returns and higher borrowing interest rates. The extent to which this occurs depends on a number of factors, including the extent to which firms may already be able to charge above competitive prices for some products.

Know what’s happening? You’ve got to pay back your share of that fake capital vaporized in the decoupling process. You borrowed against it and bought crap with it and got a raise because of it and now you’ve got to give it back.
That’s all.

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Are Today’s Accountants Already Occupying Wall Street?

by Adrienne Gonzalez

Caleb and I had a talk last night and it made me think about this whole Occupy Wall Street thing. More importantly, it made me think about what I am and am not doing to support it. I haven’t been to a rally, even to take pictures (last time I tried to do that, I was the only one out in front of the Federal Reserve Board at 6 in the morning except for the lone Fed cop patrolling the perimeter).

I get that people are pissed off. I’m pissed off too. I’ve been pissed off, don’t tell me about being pissed off. I was lugging around aFed sign made on top of “Ron Paul ’08” acrylic three years ago, you don’t have to tell me about being pissed off. (Here I am in 2009 on SF Citizen in a “Bernanke 00%” t-shirt at an anti-Iraq war rally)

And I get that for some people, all there is to do is go downtown with a drum and some poorly-written signs on cardboard ripped from your mom’s Costco packages in the recycle bin. That’s totally fine, everyone has their own way of sticking it to the man.

For a lot of Going Concern readers, sticking it to the man means showing up every day in business casual pretending to give a fuck about COSO but actually knowing that it’s all a lie. They work you to the bone until you leave or submit and get promoted to manager. Partner if you’re lucky. Run on that hamster wheel, here have this bonus, keep going and one day you can beat your own subordinates into submission. Go, go, go… Many of you get that this is bullshit but keep showing up every day anyway, and to me, you are your own special kind of protester. Same as last year, motherfucker, it’s the ultimate form of rebellion.

Too much?


Point being, everyone has their own way of screwing the establishment. Francine does it railing against the Big 4. Bill Sheridan and Tom Hood do it at the MACPA with professionalism. Tom Selling does it by riling up fellow academics. Professor Dave Albrecht does it by being seen in public canoodling with known incendiaries like yours truly.

I do it by ripping on the IASB as often as I am allowed to, infiltrating the Hill to sniff out what’s the latest in CPA lobbying efforts and getting in as many F bombs as I can on the dry subject of accounting. That’s all I can do. I can’t abandon my day job to hang out in Manhattan eating vegan paninis. I can make and distribute offensive Bernanke fridge magnets.

I completely understand why people are attracted to Occupy Wall Street; the part I’m struggling with is why so many of the 99 Percenters seem obsessed with this thing called “fairness” that does not, in fact, exist. Is it fair that any of us have to drag our asses to work every day and do what we do? Is it fair that Becker costs $3,000 and doesn’t pass the CPA exam for you? Is it fair that many of you are drowning in student loan debt and seemingly forced to get Master’s degrees just to work in your field? Is it fair that Caleb gets listed in all the accounting publications and I’m stuck as the sidekick hack who always manages to piss people off? This world is unfair, sorry to be the bearer of bad news. I have to write about accounting every day of my life, it’s un-fucking-fair, we get it.

In my view (for whatever that is worth, which is probably not more than our company pays me to write this post), the ultimate rebellion is assimilating and infiltrating the establishment to enact real change from the inside. Are partners scared as shit of this website? Yes. If they’re threatening you with termination if you even dare to write us for advice, we’re doing something right. And I didn’t even have to not shave my armpits to accomplish that (but Caleb probably shaved his).

Are any of you going to independently revolutionize the accounting industry? Probably not. But collectively, you have scared the pants off of lazy ass recruiters and partners across this country who thought you didn’t have it in you. They read us because they feel like they have to or else they’ll lose touch with what you guys are thinking, and it scares the living shit out of them. In my mind, that’s a far more effective message to send the The Establishment, whoever the hell they are.

I fully support the fundamental sentiment of Occupy Wall Street but much prefer fulfilling my incendiary duties here trying to get accounting kids riled up and questioning why they put up with the shit they do. Working mothers in public accounting should be allowed to have children. Interns should be allowed to ask questions (even dumb ones). Auditors should be expected to question last year’s logic. It’s not complicated but it’s important work that a lot of you do, and I hope that you get that.

It is not your fault that we’re here. Many of you just followed the rules.

Thanks for letting me be a part of that. Beats standing around with a fucking sign, that’s for sure.

Earlier:
Wanted: Accountants for Large Protest; Organizational Skills and Experience with Anything Slightly Resembling a Expense Reimbursement Policy a Plus [GC]