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CECL and Byelorussian

This is... not great. It's complex and technical, so I'll try to translate it into layman's terms.

After the 2008 financial crisis, the accounting community decided to make changes to how we measure things. The hope was that, by measuring things more accurately, we would make a future financial crisis less likely.

So they spent 12 years coming up with and implementing CECL, which requires banks to use economic models to predict what portion of their loans will eventually be uncollectable. They'll need to revisit these models each quarter. When the estimates provided by the models change, the banks will recognize paper profits or losses.

The new standards go into effect on March 31, at which point large parts of the planet will likely be under quarantine.

This means that the first real-world application of these economic models will be situations that no economic model could have ever predicted, and that have not happened in living memory. No one will understand what they're looking at when they look at the results, because no once has ever used those results before. There's a strong possibility that the rapid, unpredictable changes in economic outlook will result in very large paper losses for the banks, which could make it difficult for them to lend, and which could hammer a stock market that may, at that point, for all we know, be in the early stages of recovery.

This is not an ideal time to be doing this. It's kind of like if you've just spent a few weeks studying Byelorussian on Duolinguo, and you think you're just about at the point where you might want to try having a simple conversation with someone in Byelorussian, and then you get taken hostage by Byelorussian terrorists and have to bargain with them for your life. It's great that you have an opportunity to practice your new language, but this is maybe not the best time for your first ever Byelorussian conversation.

Likewise, it's great that CECL is finally ready for implementation, but maybe we should hold off for a little while until we're ready to implement it.

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