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Steps Being Taken to Prevent Another Meltdown

One of the most difficult things for investors both professional and amateur to do is analyze some of the structured products that are now being called Toxic Assets. Pricing them has become difficult because in alot of cases, the assets backing them are hard to identify and disclosure documents can contain hundreds of pages of data that can take days and even weeks to analyze.

In order to analyze the data, a more efficient reporting framework is being developed to extract the releveant numbers so one pool of mortgages or asset backed securities can be analyzed and compared to another.

This will allow investors and analysts to compare investments and make informed decision in a very timely matter. The reporting system being worked on now is called XBRL that stands for eXtensible Business Reporting Language. For more information on it, I have added a link to the CFA Institute website.

When the government can stop worrying about which company will fail next and concentrate on prevention, you will hear alot more aboout XBRL. Your thoughts and comments are greatly appreciated.


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