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Here is a thought but more of a question…does Wall Street manage risk as well as a casino? I realize this is a preposterous question because of differences in scale, in operations and in the “things” bet upon. This said, it is possible to say that casinos seem better able to account for the occurrence of devastating fat tails. Remember fat tails? They are things like the market crashes of 1987 and 2000, Long-Term Capital Management, the collapse of Bear Stearns, the Savings and Loan Crisis, the crash of 1929, the collapse of Northern Rock, the Russian Debt crisis, the 1997 Asian financial crisis, the 1990 Japanese asset bubble crisis, the 1973 oil crisis and 1978 energy crisis, the Credit Crisis, etc. Anyway, casinos, unlike investment banks seem at times to display a better operational grasp of risk. With fewer investment banks and universal banks like Chase and Bank of America left after the Credit Crisis, the possibility of prospective catastrophic failure may still be greater than before.

Two years ago, things were going along well on Wall Street before the current Credit Crisis. So well, that we stopped talking about Barings, National Australia Bank, Kidder Peabody, Enron and other things like that. Talking about the possibility of operational failure at global investment banks was until last September 2008, would have been odd. Somewhat akin to warning a teenager about old age-a futile and strange exercise.

Consider that in 2006, Goldman Sachs announced, before it was on the cover of the Economist in 2007, that it had turned out $2.6 billion in profits in just three months-nearly half of what it earned in the entire 2005 year. Perhaps not coincidentally, Goldman also put a record amount of the firm’s capital at risk of evaporating on any given trading day. Goldman’s value at risk jumped to $92 million, up 135% from $39 million in 2001.

If you are looking for that next house in the Hamptons, there are two words you need to get your arms around and own. These two simple words can make you wealthy beyond measure. Excess will be yours. You could be a Master of the Universe able to buy, anything and anyone. These words are “financial obfuscation.” It is true. I am talking about the greatest game ever, no not baseball. . .investment banking.

Marking to market works against financial obfuscation. Marking to market is the opposite of notional value and it is a characteristic of the most transparent financial markets.

One of the provisions of the $700 billion dollar bailout bill that was passed by the House of Representatives on October 3, 2008 includes a provision that gives the Securities and Exchange Commission the right to suspend mark-to-market accounting under Statement Number 157 of the Financial Accounting Standards Board. In other words, the SEC would be allowed to suspend the use of mark to market accounting standards whenever it thinks the public’s interest would be best served by its doing so.