Australia has one of the most resilient economies in this global downturn and some of the most honest banks? Seriously, Australia, how did you swing that? While I would suggest that in the long run the two will be correlated, I would actually expect the short run to be the exact opposite. After all, the whole reason we will delay FAS 166[1] before the November 15 activation is that having our banks resort to honest accounting would plunge the entire nation into a black hole of despair.
[1] FAS 166 will start generating headlines soon. That’s the delayed accounting standard for off balance sheet investments. Its delay is the reason Citigroup is still alive. I’m not sure what the arguments will be for allowing publicly traded companies to hide investments from their shareholders, but expect some good ones.
