Ben Stein, the highly questionable but occasionally correct pundit/jester has a few suggestions for the economic crisis. I post this because, for the most part, I tend to agree with him.

RTFA: http://www.nytimes.com/2009/03/08/business/08every…

REIN IN A RULE Immediately end the near-universal applicability of the accounting rule formally known as FAS 157. This is the “mark to market” rule that requires banks and other finance houses to value securities at current market prices, even when they may plan to hold those securities for some time.

The rule was intended to provide greater transparency. But its deficiencies are glaring. It allows short-sellers to basically price mortgage-backed bonds and to make them trade for pennies, even if the bonds are still meeting their payments. This “mark to market” price often does not come even close to the value of future cash flows that can reasonably be expected. The “mark to market” price is just the price at which the last short-seller made his sale.

This accounting rule kills banks and insurers, kills credit generally and makes taxpayers pay off the profits of short-sellers. It’s time to stop this giant gift to those sellers.

REVIVE A RULE End “naked short-selling” and bring back the “uptick” rule. The naked short-seller can sell shares without having borrowed the stock first. This is like tossing great white sharks into the kiddie end of the pool.

And then there’s the mystery of why the Securities and Exchange Commission ever ended the rule that requires an uptick in a share price before a short sale. The elimination of that restriction brings a major downside bias into prices.

Mary L. Schapiro, the new chairwoman of the S.E.C., should bring back the uptick rule. Yesterday wouldn’t be soon enough.

ADD A RULE Don’t allow speculators with no insurable interest to buy credit-default swaps on bonds.

Okay – this isn’t really much of a stretch, since there have been food riots constantly for several years now… but you heard it here, folks. Tough economic times push those commodities speculators to bet on higher prices, even though petrol is at the lowest price in almost a decade.

RTFA: http://www.ft.com/cms/s/0/6f481fd2-06b6-11de-ab0f-…

Food commodity prices this year will remain above historical levels, hitting poor countries for the third year in a row, according to the US department of agriculture.

The forecast at the USDA’s annual conference in Washington points to lower prices than in the first half of last year, when the cost of commodities such as corn, wheat, soyabean and rice hit all-time highs.

Joseph Glauber, USDA chief economist, said the impact of the economic crisis on food consumption would depress agriculture commodity prices temporarily, but he warned that prices would remain well above average for the eight years since 2000.

Mr Glauber told the Financial Times that the outlook was “for a return to higher prices” as some of the pressures that drove last year’s increases and relatively strong growth in emerging markets “will return to play a major role” this year or in early 2010. “This is going to be again a tough year [for poor countries],” he said.

RTFA: http://www.google.com/hostednews/afp/article/ALeqM…

World leaders agreed at an economic crisis summit Saturday to an action plan for reforming the financial system and promised to work together to restore global growth, according to a final communique.

“We are determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world’s financial systems,” the final statement from the G20 group of countries said.

The statement committed the leaders, whose countries account for 85 percent of the world economy, to fiscal measures to boost national economies and laid out a series of areas for review before a deadline of March 31.

Six areas will be targeted: regulating those areas of the financial markets which have exacerbated the crisis, boosting transparency in the often murky derivatives markets and reforming compensation practices.

The ministers must also evaluate global accounting norms and the financing needs of international financial institutions.

Finally, they must draw up a list of financial institutions whose collapse would imperil the global financial system .

Okay – the US Dollar is intact. However, what are we to make of that final line: “financial institutions whose collapse would imperil the global financial system?” Watch out for more to precipitate out of that one.