[Vision2020] Vision2020 Digest, Vol 27, Issue 234

Thu Sep 25 10:06:30 PDT 2008

Hi all, Bank of Idaho at www.bankofidaho.com is paying 5% interest on deposits up to $25k in a regular checking account to Idaho residents!!  FDIC insured and easy to meet terms.  There is no minimum limit, free online bill pay, ATM fee refunds (I just got $19 back from last months ATM fees), etc, etc.

Keeps up with inflation better than a mattress or hole in the ground plus more piece of mind that this is an actual brick and mortar bank with branches in Idaho vs. the online only companies like ING and Emigrantdirect.com.  I learned of Bank of Idaho from a banner ad on Mint.com which is endorsed by Reader's Digest.

(Don Edwards received no compensation for the above endorsement, he has just seriously been impressed with the aformentioned company)

> From: vision2020-request at moscow.com> Subject: Vision2020 Digest, Vol 27, Issue 234> To: vision2020 at moscow.com> Date: Wed, 24 Sep 2008 21:14:12 -0700> > Send Vision2020 mailing list submissions to> vision2020 at moscow.com> > To subscribe or unsubscribe via the World Wide Web, visit> http://mailman.fsr.com/mailman/listinfo/vision2020> or, via email, send a message with subject or body 'help' to> vision2020-request at moscow.com> > You can reach the person managing the list at> vision2020-owner at moscow.com> > When replying, please edit your Subject line so it is more specific> than "Re: Contents of Vision2020 digest..."> > > Today's Topics:> > 1. Re: Why are we bailing out all these large corporations?> (Andreas Schou)> 2. Re: Manchester United (Andreas Schou)> 3. Re: Why are we bailing out all these large corporations?> (Paul Rumelhart)> 4. Re: Manchester United (Jeff Harkins)> > > ----------------------------------------------------------------------> > Message: 1> Date: Wed, 24 Sep 2008 20:36:57 -0700> From: "Andreas Schou" <ophite at gmail.com>> Subject: Re: [Vision2020] Why are we bailing out all these large> corporations?> To: "Paul Rumelhart" <godshatter at yahoo.com>> Cc: Tom Hansen <idahotom at hotmail.com>, Vision2020> <vision2020 at moscow.com>, donovanjarnold2005 at yahoo.com> Message-ID:> <a80566c40809242036x26177e66w53e6402aaaf91de7 at mail.gmail.com>> Content-Type: text/plain; charset=ISO-8859-1> > On Wed, Sep 24, 2008 at 7:43 AM, Paul Rumelhart <godshatter at yahoo.com> wrote:> > Andreas,> >> > What are the consequences of doing nothing that I hear mentioned a lot in> > passing but which are never laid out? Will we really take down our economy> > and start harming the global economy if we don't do something?> > What they're worried about is a complete lockdown of banks' ability to> extend short-term credit, followed by a lockdown of the banks' ability> to extend long-term credit. Everyone wants to gather as much cash and> T-bills (which are as good as cash) as possible; everyone wants to> sell risky assets. No one wants to borrow; no one wants to lend.> > This freezes up the entire credit system, and probably, incidentally,> kills some banks, because banks have a tendency to borrow short and> lend long. If they can't roll over their loans, they grind to a halt.> > The credit freeze is way worse than it sounds. The economy largely> operates in a prospective rather than a retrospective basis: people> buy things with chunks of money and then pay in installments, rather> than build up a chunk of money in installments and then pay all at> once. This makes a lot of sense for large assets like cars,> refrigerators, houses, et misc: it allows people to make gainful use> of the asset, and thus cause the asset to produce value, before they> otherwise would have been able to. Without access to credit, things> like cars and houses don't get bought, because people just can't buy> them in cash. Which means that the sectors producing and selling them> take a hit.> > I'm unconvinced, given that Warren Buffet is throwing five billion> dollars at a financial services company, that it's going to be as bad> as all that*. But that's the theory.> > -- ACS> > * Of course, the cynic in me thinks that Buffet may just be taking his> place at the federal trough. But that seems like a risky bet, given> that the Bernanke/Paulson proposal appears to be DOA.> > > > ------------------------------> > Message: 2> Date: Wed, 24 Sep 2008 20:40:25 -0700> From: "Andreas Schou" <ophite at gmail.com>> Subject: Re: [Vision2020] Manchester United> To: "Jeff Harkins" <jeffh at moscow.com>> Cc: vision2020 at moscow.com> Message-ID:> <a80566c40809242040h72080b4ck2818ac17be89e912 at mail.gmail.com>> Content-Type: text/plain; charset=ISO-8859-1> > Thanks for the info, Jeff. I was looking forward to watching my 1/300> millionth of a soccer team. It does appear, however, that we own their> $100m* advertising contract.> > Perhaps we can get them to put the American flag on their jerseys.> > -- ACS> > * Incidentally, I must've misread the article. It struck me as amazing> that any advertising contract could be worth $100m. It must be the> whole team, I thought. Sadly, no.> > On Wed, Sep 24, 2008 at 12:58 PM, Jeff Harkins <jeffh at moscow.com> wrote:> > I will work through your comments about the "bail-out" and comment as> > warranted. However, I must offer the following to correct the record.> >> > AIG is a sponsor of Manchester United, not an owner. In fact, it has been> > reported that AIG is the largest sponsor of a sports team in the world.> > Thus, you will note that Man U jerseys carry the AIG logo. Man U is owned> > by Michael Glazer (an American) and the Glazer family.> > [http://www.iht.com/articles/2008/09/21/business/AD22.php]> >> >> > At 06:24 PM 9/21/2008, you wrote:> >>> >> Tom --> >>> >> I'm going to have to (probably) agree with Jeff on this one. FDIC only> >> insures consumer banks, and SIPC provides a very limited amount of> >> protection -- it only insures investors against assets endangered by> >> the failure of a brokerage, rather than against the assets themselves> >> dropping in value. Neither has a lot to do with the utter market> >> collapse that's going on around us right now. Some of it could've been> >> prevented by re-regulating the financial markets; other elements have> >> always been poorly regulated.> >>> >> The first problem was the explosion in subprime and exotic mortgages.> >> Here, part of the problem was the incentive structure for mortgage> >> brokers: individually, they received a commission on the mortgage;> >> however, since the mortgage frequently no longer belonged to the> >> original broker when the borrower defaulted, they didn't care. So long> >> as the housing boom was moving fast enough to get the mortgage off the> >> balance sheet by the time it came due, no one cared*.> >>> >> The second problem was the explosion in the sale of mortgage-backed> >> securities. This, essentially, was a trillion-dollar attempt to spin> >> straw into gold. Large banks packaged high-risk mortgages together in> >> such a way as to -- supposedly -- balance the various risks against> >> each other in such a way as to make the investments safe. They then> >> leaned on the ratings agencies to rate these securities either AA or> >> AAA (essentially, as safe debt to purchase), which they did. One> >> would think that the financial geniuses that run Wall Street would> >> know that there's no honest way to make 2 + 2 = 5. But there you have> >> it.> >>> >> Third, leverage. The debt to asset ratio being carried by Wall Street> >> was ludicrous. The SEC had granted exemptions for the big five> >> investment banks, allowing them to take out loans at anywhere from> >> 30:1 to 40:1. Of the five companies granted that exemption, only one> >> -- Goldman Sachs -- is still in anything resembling a decent state.> >> The higher your leverage, the more you depend on outsmarting the> >> market to outrun your debts. Worse, *your* debts are in someone else's> >> accounts receivable column. If you drop into bankruptcy,> >> congratulations: your creditors can all take the number in their> >> accounts receivable and divide it by the amount to which you're> >> leveraged. This causes ripple effects across the entire financial> >> sector.> >>> >> I've got no problem with the government spending taxpayer money to> >> bail out Wall Street. The CDOs (mortgage-backed securities) that the> >> government is thinking of purchasing probably do have some underlying> >> value. But if we're going to be buying a ton of bad debt, we should be> >> canny consumers: we don't take on $700 billion worth of debt without> >> getting something in return. An equity stake in every company from> >> whom we buy CDOs should be fine. The US taxpayer having a seat on the> >> board of directors of every major Wall Street firm would also provide> >> an elegant solution to the regulation problem: each firm is regulated> >> (by a federal trustee) to the extent it couldn't keep its own house in> >> order*.> >>> >> -- ACS> >>> >> * Incidentally, despite what John McCain's commercials might be> >> telling you, Fannie Mae and Freddie Mac had very little to do with> >> this business. The definition of a 'subprime mortgage' is a mortgage> >> which neither Fannie nor Freddie would take. Fannie and Freddie's> >> problems were largely caused by (a) investor panic, (b) their> >> attempts, while wearing their 'private corporation' hats, to compete> >> at a level of risk higher than they ought to've, and (c) a massive> >> liquidity crisis caused by everyone wanting to sell mortgages and no> >> one willing to buy.> >>> >> ** Also incidentally, as a US taxpayer, you might be happy to know> >> that since the AIG bailout, you now own a one-three-hundred-millionth> >> stake in Manchester United, which I am told is a soccer team. They> >> used to be a property of AIG: now they're yours. They're quite good.\> >>> >> On Sun, Sep 21, 2008 at 5:35 PM, Tom Hansen <idahotom at hotmail.com> wrote:> >> > Paul -> >> >> >> > It is my impression that this economic crapshoot was instigated by> >> > deregulation of the industry under both Reagan and Bush Sr..> >> >> >> > It used to be that it was difficult (stringent requirements and constant> >> > federal monitoring) for banks, S&Ls, and other financial institutions to> >> > qualify for FDIC/FSLIC "protection". Once Reagan removed these> >> > requirements> >> > and Bush Sr. drastically limited (if not eliminated) federal> >> > monitoring, banks approved loans to people/businesses that possessed no> >> > viable capability of ever repaying the loans and investment firms made> >> > investments that would make third-world countries cringe. These> >> > financial> >> > institutions were not concerned about going "out of business", not as> >> > long> >> > as they had that FDIC/FSLIC sticker on their doors.> >> >> >> > So, as Bush Jr. tries to pass himself and potentially McCain (who> >> > coincidentally has been in the Senate since Nixon left the White House)> >> > as> >> > heroes to the American people, remember who made this all possible.> >> > Hint:> >> > It wasn't Obama.> >> >> >> > Tom Hansen> >> > Moscow, Idaho> >> >> >> >> >> >> >> >> >> > ________________________________> >> >> Date: Sun, 21 Sep 2008 16:59:05 -0700> >> >> From: godshatter at yahoo.com> >> >> To: vision2020 at moscow.com> >> >> Subject: [Vision2020] Why are we bailing out all these large> >> >> corporations?> >> >>> >> >> If a large corporation is about to go bankrupt because they loaned> >> >> money> >> >> without proper collateral behind it and without a determination that> >> >> the> >> >> person taking out the loan could reasonably pay it back, shouldn't we> >> >> let it crash and burn? Isn't that what is so casually referred to as a> >> >> "market correction"?> >> >>> >> >> I've heard it stated that there is something different about this> >> >> situation - it's more dire and it could have a snowball effect on the> >> >> rest of the economy or even the globe. Does anyone here know enough> >> >> about this to explain that?> >> >>> >> >> What is so important about this situation that would result in the> >> >> necessity for an Iraq War-sized expenditure?> >> >>> >> >> Or is it a case of the rich looking out for the rich, which I'm> >> >> half-tempted to believe is the case.> >> >>> >> >> Paul> >> >>> >> >> =======================================================> >> >> List services made available by First Step Internet,> >> >> serving the communities of the Palouse since 1994.> >> >> http://www.fsr.net> >> >> mailto:Vision2020 at moscow.com> >> >> =======================================================> >> >> >> >> >> > =======================================================> >> > List services made available by First Step Internet,> >> > serving the communities of the Palouse since 1994.> >> > http://www.fsr.net> >> > mailto:Vision2020 at moscow.com> >> > =======================================================> >> >> >>> >> =======================================================> >> List services made available by First Step Internet,> >> serving the communities of the Palouse since 1994.> >> http://www.fsr.net> >> mailto:Vision2020 at moscow.com> >> =======================================================> >> >> > > > ------------------------------> > Message: 3> Date: Wed, 24 Sep 2008 21:04:18 -0700> From: Paul Rumelhart <godshatter at yahoo.com>> Subject: Re: [Vision2020] Why are we bailing out all these large> corporations?> To: Andreas Schou <ophite at gmail.com>> Cc: Tom Hansen <idahotom at hotmail.com>, Vision2020> <vision2020 at moscow.com>, donovanjarnold2005 at yahoo.com> Message-ID: <48DB0DC2.9000505 at yahoo.com>> Content-Type: text/plain; charset=ISO-8859-1; format=flowed> > Thank you for the explanation, that makes perfect sense. While I'm sure > many bank presidents right now are shitting bricks, moving this country > from one where almost everyone is in debt up to their eyeballs to one > where people save their money and buy only what they really need or want > seems like a good thing. Sure, you're not going to save for thirty > years and then buy a house, but if the pendulum swings away from the > side it just smacked into, then maybe our economy will eventually become > stronger after the banks (and people) riding the bleeding edge crash and > burn spectacularly.> > Banks will have to move from borrow short and lend long to borrow long > and lend short for a while in order to survive. That means they'll > raise the interest rates on savings accounts, and require your first > born son as collateral when buying an ATV. Perhaps a balance will be > struck somewhere. The only difference will be that not everybody has as > much useless crap as they currently do.> > It's only common sense to realize that when *everyone* is in debt, the > system's going to break soon.> > Paul> > Andreas Schou wrote:> > On Wed, Sep 24, 2008 at 7:43 AM, Paul Rumelhart <godshatter at yahoo.com> wrote:> > > >> Andreas,> >>> >> What are the consequences of doing nothing that I hear mentioned a lot in> >> passing but which are never laid out? Will we really take down our economy> >> and start harming the global economy if we don't do something?> >> > >> > What they're worried about is a complete lockdown of banks' ability to> > extend short-term credit, followed by a lockdown of the banks' ability> > to extend long-term credit. Everyone wants to gather as much cash and> > T-bills (which are as good as cash) as possible; everyone wants to> > sell risky assets. No one wants to borrow; no one wants to lend.> >> > This freezes up the entire credit system, and probably, incidentally,> > kills some banks, because banks have a tendency to borrow short and> > lend long. If they can't roll over their loans, they grind to a halt.> >> > The credit freeze is way worse than it sounds. The economy largely> > operates in a prospective rather than a retrospective basis: people> > buy things with chunks of money and then pay in installments, rather> > than build up a chunk of money in installments and then pay all at> > once. This makes a lot of sense for large assets like cars,> > refrigerators, houses, et misc: it allows people to make gainful use> > of the asset, and thus cause the asset to produce value, before they> > otherwise would have been able to. Without access to credit, things> > like cars and houses don't get bought, because people just can't buy> > them in cash. Which means that the sectors producing and selling them> > take a hit.> >> > I'm unconvinced, given that Warren Buffet is throwing five billion> > dollars at a financial services company, that it's going to be as bad> > as all that*. But that's the theory.> >> > -- ACS> >> > * Of course, the cynic in me thinks that Buffet may just be taking his> > place at the federal trough. But that seems like a risky bet, given> > that the Bernanke/Paulson proposal appears to be DOA.> >> > > > > > > ------------------------------> > Message: 4> Date: Wed, 24 Sep 2008 21:14:34 -0700> From: Jeff Harkins <jeffh at moscow.com>> Subject: Re: [Vision2020] Manchester United> To: "Andreas Schou" <ophite at gmail.com>> Cc: vision2020 at moscow.com> Message-ID: <200809250414.m8P4EMc9027437 at mail-gw.fsr.net>> Content-Type: text/plain; charset="us-ascii"; format=flowed> > Actually, we "owe" for the advertising contract. If we pay the bill, > we get to have the AIG logo on the shirts.> > Most Man U fans are rather uncomfortable with an American owning the > club and they are further irritated that AIG has the largest > advertising contract.> > At 08:40 PM 9/24/2008, you wrote:> >Thanks for the info, Jeff. I was looking forward to watching my 1/300> >millionth of a soccer team. It does appear, however, that we own their> >$100m* advertising contract.> >> >Perhaps we can get them to put the American flag on their jerseys.> >> >-- ACS> >> >* Incidentally, I must've misread the article. It struck me as amazing> >that any advertising contract could be worth $100m. It must be the> >whole team, I thought. Sadly, no.> >> >On Wed, Sep 24, 2008 at 12:58 PM, Jeff Harkins <jeffh at moscow.com> wrote:> > > I will work through your comments about the "bail-out" and comment as> > > warranted. However, I must offer the following to correct the record.> > >> > > AIG is a sponsor of Manchester United, not an owner. In fact, it has been> > > reported that AIG is the largest sponsor of a sports team in the world.> > > Thus, you will note that Man U jerseys carry the AIG logo. Man U is owned> > > by Michael Glazer (an American) and the Glazer family.> > > [http://www.iht.com/articles/2008/09/21/business/AD22.php]> > >> > >> > > At 06:24 PM 9/21/2008, you wrote:> > >>> > >> Tom --> > >>> > >> I'm going to have to (probably) agree with Jeff on this one. FDIC only> > >> insures consumer banks, and SIPC provides a very limited amount of> > >> protection -- it only insures investors against assets endangered by> > >> the failure of a brokerage, rather than against the assets themselves> > >> dropping in value. Neither has a lot to do with the utter market> > >> collapse that's going on around us right now. Some of it could've been> > >> prevented by re-regulating the financial markets; other elements have> > >> always been poorly regulated.> > >>> > >> The first problem was the explosion in subprime and exotic mortgages.> > >> Here, part of the problem was the incentive structure for mortgage> > >> brokers: individually, they received a commission on the mortgage;> > >> however, since the mortgage frequently no longer belonged to the> > >> original broker when the borrower defaulted, they didn't care. So long> > >> as the housing boom was moving fast enough to get the mortgage off the> > >> balance sheet by the time it came due, no one cared*.> > >>> > >> The second problem was the explosion in the sale of mortgage-backed> > >> securities. This, essentially, was a trillion-dollar attempt to spin> > >> straw into gold. Large banks packaged high-risk mortgages together in> > >> such a way as to -- supposedly -- balance the various risks against> > >> each other in such a way as to make the investments safe. They then> > >> leaned on the ratings agencies to rate these securities either AA or> > >> AAA (essentially, as safe debt to purchase), which they did. One> > >> would think that the financial geniuses that run Wall Street would> > >> know that there's no honest way to make 2 + 2 = 5. But there you have> > >> it.> > >>> > >> Third, leverage. The debt to asset ratio being carried by Wall Street> > >> was ludicrous. The SEC had granted exemptions for the big five> > >> investment banks, allowing them to take out loans at anywhere from> > >> 30:1 to 40:1. Of the five companies granted that exemption, only one> > >> -- Goldman Sachs -- is still in anything resembling a decent state.> > >> The higher your leverage, the more you depend on outsmarting the> > >> market to outrun your debts. Worse, *your* debts are in someone else's> > >> accounts receivable column. If you drop into bankruptcy,> > >> congratulations: your creditors can all take the number in their> > >> accounts receivable and divide it by the amount to which you're> > >> leveraged. This causes ripple effects across the entire financial> > >> sector.> > >>> > >> I've got no problem with the government spending taxpayer money to> > >> bail out Wall Street. The CDOs (mortgage-backed securities) that the> > >> government is thinking of purchasing probably do have some underlying> > >> value. But if we're going to be buying a ton of bad debt, we should be> > >> canny consumers: we don't take on $700 billion worth of debt without> > >> getting something in return. An equity stake in every company from> > >> whom we buy CDOs should be fine. The US taxpayer having a seat on the> > >> board of directors of every major Wall Street firm would also provide> > >> an elegant solution to the regulation problem: each firm is regulated> > >> (by a federal trustee) to the extent it couldn't keep its own house in> > >> order*.> > >>> > >> -- ACS> > >>> > >> * Incidentally, despite what John McCain's commercials might be> > >> telling you, Fannie Mae and Freddie Mac had very little to do with> > >> this business. The definition of a 'subprime mortgage' is a mortgage> > >> which neither Fannie nor Freddie would take. Fannie and Freddie's> > >> problems were largely caused by (a) investor panic, (b) their> > >> attempts, while wearing their 'private corporation' hats, to compete> > >> at a level of risk higher than they ought to've, and (c) a massive> > >> liquidity crisis caused by everyone wanting to sell mortgages and no> > >> one willing to buy.> > >>> > >> ** Also incidentally, as a US taxpayer, you might be happy to know> > >> that since the AIG bailout, you now own a one-three-hundred-millionth> > >> stake in Manchester United, which I am told is a soccer team. They> > >> used to be a property of AIG: now they're yours. They're quite good.\> > >>> > >> On Sun, Sep 21, 2008 at 5:35 PM, Tom Hansen <idahotom at hotmail.com> wrote:> > >> > Paul -> > >> >> > >> > It is my impression that this economic crapshoot was instigated by> > >> > deregulation of the industry under both Reagan and Bush Sr..> > >> >> > >> > It used to be that it was difficult (stringent requirements and constant> > >> > federal monitoring) for banks, S&Ls, and other financial institutions to> > >> > qualify for FDIC/FSLIC "protection". Once Reagan removed these> > >> > requirements> > >> > and Bush Sr. drastically limited (if not eliminated) federal> > >> > monitoring, banks approved loans to people/businesses that possessed no> > >> > viable capability of ever repaying the loans and investment firms made> > >> > investments that would make third-world countries cringe. These> > >> > financial> > >> > institutions were not concerned about going "out of business", not as> > >> > long> > >> > as they had that FDIC/FSLIC sticker on their doors.> > >> >> > >> > So, as Bush Jr. tries to pass himself and potentially McCain (who> > >> > coincidentally has been in the Senate since Nixon left the White House)> > >> > as> > >> > heroes to the American people, remember who made this all possible.> > >> > Hint:> > >> > It wasn't Obama.> > >> >> > >> > Tom Hansen> > >> > Moscow, Idaho> > >> >> > >> >> > >> >> > >> >> > >> > ________________________________> > >> >> Date: Sun, 21 Sep 2008 16:59:05 -0700> > >> >> From: godshatter at yahoo.com> > >> >> To: vision2020 at moscow.com> > >> >> Subject: [Vision2020] Why are we bailing out all these large> > >> >> corporations?> > >> >>> > >> >> If a large corporation is about to go bankrupt because they loaned> > >> >> money> > >> >> without proper collateral behind it and without a determination that> > >> >> the> > >> >> person taking out the loan could reasonably pay it back, shouldn't we> > >> >> let it crash and burn? Isn't that what is so casually referred to as a> > >> >> "market correction"?> > >> >>> > >> >> I've heard it stated that there is something different about this> > >> >> situation - it's more dire and it could have a snowball effect on the> > >> >> rest of the economy or even the globe. Does anyone here know enough> > >> >> about this to explain that?> > >> >>> > >> >> What is so important about this situation that would result in the> > >> >> necessity for an Iraq War-sized expenditure?> > >> >>> > >> >> Or is it a case of the rich looking out for the rich, which I'm> > >> >> half-tempted to believe is the case.> > >> >>> > >> >> Paul> > >> >>> > >> >> =======================================================> > >> >> List services made available by First Step Internet,> > >> >> serving the communities of the Palouse since 1994.> > >> >> http://www.fsr.net> > >> >> mailto:Vision2020 at moscow.com> > >> >> =======================================================> > >> >> > >> >> > >> > =======================================================> > >> > List services made available by First Step Internet,> > >> > serving the communities of the Palouse since 1994.> > >> > http://www.fsr.net> > >> > mailto:Vision2020 at moscow.com> > >> > =======================================================> > >> >> > >>> > >> =======================================================> > >> List services made available by First Step Internet,> > >> serving the communities of the Palouse since 1994.> > >> http://www.fsr.net> > >> mailto:Vision2020 at moscow.com> > >> =======================================================> > >> > >> > > > ------------------------------> > =======================================================> List services made available by First Step Internet, > serving the communities of the Palouse since 1994. > http://www.fsr.net > mailto:Vision2020 at moscow.com> =======================================================> > End of Vision2020 Digest, Vol 27, Issue 234> *******************************************
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