Don't touch "Mark to Market".

One of the strongest institutions that we have available to us is the U.S. regulatory environment. This includes the SEC, FASB and others that define what the accounting requirements are for companies operating in the U.S. Those that suggest "Mark to Market" accounting has brought the credit crisis to our door are correct. It has seen past the sham that is financial capital and exposed it for the failed system that it is. Changing the accounting rules now will be the wrong action.

I'm not saying that there won't be changes to the accounting rules. In the future the systems will have to be rebuilt based on sound ideas and principles. To alleviate the pain that we feel today by making "Mark to Market" less onerous will only hurt the U.S. and other jurisdictions that rise from these ashes. Leave it alone and the systems will be able to build on the principles and ideas that exist or will exist, like "Mark to Market" accounting.

As noted in Reuters.

One of the reasons that the United States has so far suffered less real economic damage from the financial turmoil to date is because mark-to-market accounting has forced the banking system to take write-offs, pursue new private capital, reveal which banks are more stable than others, and force the issue of toxic mortgage-backed securities. Fair value accounting is today sending a very powerful market signal. It may also signal that the US financial sector is under capitalized and needs to shrink. Bankers of course want to deny that, but wishing does not make it so. And removing mark-to-market is just wishing.

Also as noted in the Peterson Institute and Emac's Stock Watch.

Technorati Tags: People's Market Measurement

Measuring Innovation in oil and gas.

It seems somewhat appropriate at the beginning of the new year to discuss what might be a good measurement of innovation in oil and gas. What criteria can an oil and gas company use to determine their level of innovation year over year, and in comparison to other producers. To me innovations purpose is to enhance the productivity of the oil and gas worker. Therefore, understanding there are reasonable exceptions, I would propose we use annual revenue per employee.

I have seen companies that have been able to achieve high metrics in terms of their productive capacity per employee. Mapped over a period of many years, revenue per employee would reflect on the producers ability to secure land, find commercial reserves and produce them profitably. Reflecting on the entire history of the facilities and fields the company owns and operates. Comments?

Technorati Tags: Innovation, Measurement, Strategy