This next stage will be less spectacular, thanks to accrual accounting, in which loan losses are realised gradually and offset by reserves.
In 2003 a Liberal finance minister changed the budget to full accrual accounting, which recognises revenues and costs when they are earned and incurred.
Loans were illiquid and accounted for on an accrual basis in the "banking book" rather than on a mark-to-market basis in the "trading book".
Governments, wrongly believing that they could create jobs for younger workers by driving older ones out of the job market, made it easier and easier to retire early.However, the pattern of accrual is also important, Messrs Gruber and Wise established, and differs greatly from one country to another.
His cache of ledger books note every accrual (from wages to birthday gifts) and every outlay (some worth tens of thousands of yuan, others worth pennies) in painstaking detail, providing a microscopic view of China's macroeconomic transformation.
Court decisions have suggested that these promises cannot be withdrawn; states may not even be able to limit the future accrual of pension rights by existing workers.
Germany is holding out.New Zealand probably comes closest to managing assets as a company would, in some respects going even further: it not only uses the accrual method but updates its financial statements each month.
Most make do with "cash basis" accounting rather than the "accrual" accounting used in the private sector.
Many banks are still holding assets, particularly whole loans, at values far above their market price because, under accrual accounting, losses can be booked over several years (see article).
An improvement in the actuarial rate of accrual, started in 1997, seems already to have begun to raise by two years the age at which Germans leave the formal job market.
As private employers have woken up to the rising costs and big risks of providing final-salary schemes, based on years of service and end-of-career earnings, they have closed them first to new employees and increasingly to new accrual for existing staff.
