Kass: Permabulls Blame Credit Crisis on Accounting

This blog post originally appeared on RealMoney Silver on March 5 at 7:54 a.m. EST.

"Consistency of accounting treatment is always more useful to managers and investors than the latest fad of accounting aficionados."

-- Walter Wriston, Citibank

Recently, I wrote that the "Sunshine Boys" in the media continue to dismiss the credit crisis as pie in the sky, almost as a figment of the (accounting) imagination of the bearish cabal. The permabulls hold fast to their the view that current and prospective default rates are well below the implied levels that underlie the indices, upon which mark-to-market writedowns are being taken by some of the world's largest financial institutions (and some of the smaller ones, too).

In Wednesday's Wall Street Journal, Holman Jenkins Jr., similar to many other permabulls, argues that theoretical mark-to-market accounting conventions are responsible for the credit mess. Unfortunately, like much of Ben Stein's body of work in the New York Times (and other conspirators), there is little substance in the WSJ article. Mr. Jenkins relies on thin-reed quotes (from Sam Zell, John Thain and others) and fails to document his assertions. ...