[Rhodes22-list] Question for Brad about capital shortages (Economic question about politics)

Thu Oct 16 20:13:22 EDT 2008

You know Brad, it's interesting you mentioned the conspiracy theory 
stuff. When the bailout failed the first time, I thought to myself, 
"Wonder how many of those that voted NO bought low the next day..."

Brad Haslett wrote:
> Ben,
>
> Your reference to Swiss bankers reminds me of a story from my
> economics professor in grad school.  An economist visited a small town
> high in the Swiss Alps and asked the locals what their economy was
> based on.  "We do the laundry for the next town across the valley".
> He visited the neighboring village and asked the same question.  "We
> do the laundry for the next town across the valley". Moral of the
> story - there has to be some underlying beneficial activity in
> economy, ie, you have to produce something of value.
>
> My source of information for all things related to banking, my
> backyard neighbor and commercial loan portfolio manager for a regional
> bank, returned to Chicago recently to get back to his first love,
> energy lending (mostly coal mines) so I'll have to wing it on my own.
>
> You probably understand the federal reserve system as well as I do,
> but basically, it was an evaporation of required reserves (equity)
> that caused the current meltdown.  Mark to market accounting (an
> over-reaction to Enron) dried up bank reserves and a loss in
> confidence in other banks slowed lending to a crawl.  Banks aren't
> "hoarding" cash in their vault - they don't have cash to begin with,
> that's the problem.
>
> I posed an interesting theory to my wife last week that someone was
> "toying" with our equities markets to generate so much volatility. My
> sister-in-law, the former CFO for greater Asia for a large American
> company, said out of the blue this weekend, "someone is jerking the
> American stock market around".  Neither she nor I are conspiracy
> theorists, just sane and rational people trying to make sense of an
> irrational world.
>
> What's going on here?  Please look into your crystal ball Ben and tell
> me first.  This is starting to hurt.
>
> Brad
>
> On Thu, Oct 16, 2008 at 5:11 PM, ben
> <benonvelvetelvis at theskinnyonbenny.com> wrote:
>   
>> Do you guys really think that the hundreds of billions of dollars that
>> companies used to put in the commercial paper market is now being sent to
>> swiss bank accounts, because lending to American banks for a week at a time
>> is too risky?
>>
>> It's not.  Banks are keeping their money in their vaults rather than put it
>> on the commercial paper market.  Smaller investors (100s of millions) are
>> lending their money to Uncle Sam, so they can turn around and buy bank stock
>> (which is much better than the original plan of buying bad assets), which
>> will then hopefully open the commercial paper market back up.
>>
>> Ben S.
>>
>> -----Original Message-----
>> From: rhodes22-list-bounces at rhodes22.org
>> [mailto:rhodes22-list-bounces at rhodes22.org] On Behalf Of Tootle
>> Sent: Thursday, October 16, 2008 3:11 PM
>> To: rhodes22-list at rhodes22.org
>> Subject: [Rhodes22-list] Question for Brad about capital shortages (Economic
>> question about politics)
>>
>>
>> Brad,
>>
>> How much of the so called capital shortate is really capital moving offshore
>> because of potential Obama win?  That is how much is global capital seeking
>> a safe haven? from being socialized? from coersive lending compelled by
>> Congress?
>>
>> Ed K
>> Greenville, SC, USA
>> special attachment for Andrew:
>> http://www.nabble.com/file/p20016650/Obama%2Badvocates.gif
>> Obama+advocates.gif
>>
>>
>> Ed,
>>
>> I've been out flying for the last few days.  Judging by the number of
>> people partying on the Riverwalk in San Antonio, the economy's doing
>> fine.
>>
>> Ben is mostly correct, most small business income flows directly
>> through the owners tax return.  The Obama bullseye is on those making
>> over $250,000 per year.  That sounds like a lot of money to some
>> people but it really isn't.  We've been down this road before with
>> Jimmy Carter and luxury taxes.  It will be 10 times worse under Obama.
>>  The proper description is INCOME REDISTRIBUTION!  That's what the
>> whole guys career has been about when he wasn't directing public money
>> to his friends private businesses. I still can't believe people are
>> stupid enough to believe this crap, but then again, there are lots of
>> stupid people in the world. You can't give 95% of wage earners a tax
>> cut when the bottom 40% don't pay federal income taxes.  What he
>> doesn't say in the fine print is that low income people will get a
>> check.  In some parts of the country we have a name for that, it's
>> called WELFARE.  In other parts it is called "fairness". Call it what
>> you want, it is income redistribution.
>>
>> Raising the capital gains rate will be economic suicide.  We could
>> eliminate our current "flight of capital" issues by suspending the
>> capital gains tax altogether for a few years. This whole candidacy of
>> Obama has been wishful thinking.  Who really knows what the guy will
>> do?  He's hung around Marxists his entire life, you can bet most
>> decisions will have a Marxist patina to them.
>>
>> Frankly, I'm not too worried.  One, his getting elected is not a sure
>> thing.  Two, if elected, his Chicago shenanigans can't be kept hidden
>> forever. Remember this name - State Street Bank.  I'm guessing that
>> will be the smoking gun.  Three, even if he dodges impeachment, he'll
>> only serve one term.  Four, I'll move much of my money overseas, so
>> will lots of others.  That's not very patriotic but necessary.
>>
>> I remember selling airplanes during the Carter administration with
>> high inflation, ultra-high interest rates, and high marginal tax
>> rates.  You could put together some pretty creative (read stupid) tax
>> deals with a buyer that would make an airplane positive cash flow for
>> the first year.  It was counter-productive in the long run for the
>> economy but you did what you had to do.  Some people are too young to
>> remember those years, others are just dumb.
>>
>> Brad
>>
>>
>>
>>
>> --
>> View this message in context:
>> http://www.nabble.com/Tax-Question-for-Brad-tp19960487p20016650.html
>> Sent from the Rhodes 22 mailing list archive at Nabble.com.
>>
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