tag:blogger.com,1999:blog-3764912039741974037.post1573907128574823205..comments2024-03-10T06:35:25.018-04:00Comments on Expect[ed] Loss: Reclassifying from Available-For-Sale to Hold-To-MaturityPF2http://www.blogger.com/profile/13893025381406343985noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-3764912039741974037.post-66272175052544451502011-03-16T16:30:15.978-04:002011-03-16T16:30:15.978-04:00In answer to the question as why not take the hits...In answer to the question as why not take the hits today and return to profitability - This idea is conditioned on several concepts:<br /><br />1. When the company writes down the asset, it impairs that company's capital. The company is now further restricted in the amount of business it can do, thereby reducing profit potential.<br /><br />2. Financial institutions that take their hit will not be able to write as much business, i.e. loans and insurance policies - thereby impacting the other businesses that rely on these products to do business - further impacting profits.<br /><br />3. As the business that would have gotten loans/insurance are forced to downsize their operations due to lack of working capital or insurance to take on new projects, the businesses will be forced to reduce their workforces. This impacts the economy in general with lower stock market and real estate prices resulting in still further hits in step 1.Anonymousnoreply@blogger.com