The IFRS is pro cyclical and pro volatility. The non cash "writedowns" on derivatives required by these loony bin rules are a one off. They will be written the other way when int and $A go up. Again non cash. So when the int rate goes back up to 5.5% GMG will have a write up of $400 million on derivatives alone. In one half year. If the $A were to appreciate while the US hit the wall, could see half yearly book profit nearing $1 billion under these rules. Crazy? Sure, but no crazier than the writedowns on derivatives required. I can say they are nonsense, as an academic accountant, but GMG or any REIT arent allowed to. Its the law. The law is in this case, an ass.
But a smart punter can profit from the ignorance of the majority.
dead man walking, page-39
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