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Don’t Know Much About …. the Economy

(Written the other day)

The other day my 12 year-old nephew’s social studies class (middle school) took the same citizenship test those who are to be naturalized U.S. citizens.  Of the 17 or so in his class, he was one of three who passed it.  For their efforts, each student passing received a red, white, & blue ‘rubber’ bracelet.  There was some ‘patriotic saying’ etched onto it as well.  But the thing that caught his attention was where the bracelet was made – where else?  China.  But then what ARE we producing anymore?  What?  Financial strategies? SUVs? Genetically altered seeds/food?  War weapons?

Like many other people my eyes will often begin glazing over as soon as Paul Krugman or anyone else for that matter starts talking about finance or the economy.  It is not that we or I don’t understand.  For me, I just think a lot of it is a bullshit, made-up game that’s just too testosterone-drenched for me to pay attention.

Ever since the news of $700 billion being needed to “bail out” Wall Street, I’ve been absolutely livid.  The Friday before last, there was the crash of the commuter train in the San Fernando Valley in California, Sept. 12th.  During a press conference in one of the days immediately following the accident, a member of the National Transportation Safety Board, Kitty Higgins, spoke of a safety system that could’ve, would’ve stopped these two trains from colliding.  The cost?  Two billion dollars – $2 billion dollars.

The accident brought new calls on Tuesday to expand greatly the use of “positive train control,” collision-avoidance systems using satellites, transponders and other technology to automatically stop a train headed for a crash. Such systems are in use on a small fraction of the nation’s rail lines, mainly on high-speed segments of the Amtrak Washington-to-Boston run, and are being tested in several other states.

The National Transportation Safety Board has lobbied for years for these systems and has accused the industry of foot-dragging over the cost, which could exceed $2 billion to put on major lines nationwide.

Now here was a dramatic example of how our infrastructure needs updating, reinforcing, and revamping while that goddamned ‘war’ in Iraq rages on at an estimated $12 billion per month and the cost to be incurred in implementing it.  And yet we “can’t.”  I paraphrase Ms Higgins inquiry: Just how many deaths are acceptable before the technology is utilized?

“We regulate in this country by counting tombstones,” said Barry M. Sweedler, the former director of the NTSB’s office of safety recommendations. “If you don’t have enough people dead, not much gets done. The pressure isn’t there to do it.”

And just today Senators Boxer & Feinstein worked to get a railway bill readied for the vote and “grilled officials with Metrolink, the Federal Railroad Administration and Union Pacific in a briefing earlier in the day in Washington.“.

While the Commerce Committe with Senators Boxer and Feinstein were busy in their grilling, the Senate Banking Committee were raking Henry Paulson (Secretary of the Treasury) and Ben Bernanke (Chair, Federal Reserve Board) back and forth over red-hot coals.  Paulson appeared bored during many of the opening comments from senatorial members on the Banking Committee while Bernanke had the good sense to look interested with his attention usually focused on who was speaking.

We can bail out the greedy misfits who suckered up people to the tune of $700 billion dollars, but cannot reinforce, rebuild or otherwise insure the stability of our infrastructure to the tune of a mere $2 billion.  $2 billion vs 12 billion vs $700 billion.

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More on Tamarack’s Bid for $42.5 Million From Idaho

Now if you were the manager or controller, say, of a very large financial concern that had many, many dollars to ‘give’ in the form of loans, would ya give it to Tamarack right about now?  Especially after this.

The majority owners of Tamarack Resort have filed for bankruptcy to avoid foreclosure by Credit Suisse, which is owed more than $262 million from loans the resort took out for construction.

Perhaps the name ‘Credit Suisse’ leaps out at you…. but it shouldn’t be confused with – Société Générale, who had a “rogue trader” running the show for a few minutes. Société Générale is French; Credit Suisse is, well, Swiss.  However, now, Credit Suisse is having its own problems with “pricing errors.”

Credit Suisse said its internal review had “identified mismarkings and pricing errors by a small number of traders in certain positions in our structured credit trading business “. The bank did not detail the problem.

Oh, uh-huh.

.

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Sooo – that’s a bit on the big picture background.  Now for Tamarack.  Tamarack is investigating other options in the way of other financing avenues.

One of current places Tamarack is looking toward is the Municipal Bond Bank (MBB) for the State of Idaho.   The chair of the MBB is the state treasurer; Idaho’s state treasurer is none other than Ron Crane.  (Some of us remember Ron Crane.)  Now this is for infrastructure needs, more specifically – sewer and water.

Soooo – now that the major owners/investors of Tamarack have filed for bankruptcy protection, where’s this leave the loan application with Municipal Bond Bank of the state of Idaho?  Welll, it is, of course, up to the board according to the State Treasurer’s office.   Investment Management in the Treasurer’s Office was very helpful and quite encouraging in relaying the importance of the public’s involvement as we are, after all, taxpayers. They stressed, the meetings are always open to the public.

The next meeting: March 4, 2008 at 1:30 pm in Room 208, 2nd Floor of the Borah Post Office (Federal Building) – downtown – . The state treasurer’s office temporary quarters while the Capitol is being renovated. The street address is 304 N. 8th Street.

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As an aside – The North Lake Recreational Sewer and Water District is the entity that Tamarack is approaching to help with their infrastructure needs in further construction and development. North Lake’s involvement is no more partisian than, say, Boise’s Bench Sewer District. North Lake covers the property on the west side of Cascade lake up to Tamarack.

Following Tamarack’s Loan Request

[Update via New West: Tamarack’s Investor/Owners filed for bankruptcy protection last week.]

After inquiring from a financial whiz I know, who – incidentally – knew nothing about Municipal Bond Banks or the like, I decided to call the state treasurer’s office to find out how the scoop on Tamarack’s seeking to “persuade the state to guarantee a $42.5 million low-interest loan to a local sewer district for a major expansion of sewer and drinking water systems that serve the ski and golf community and others in the area.”

As I learned today, the MBB is a conduit for the acquisition of financing.  With an educational background and degrees in the biological sciences, history, and religious studies, I know practically nothing about finance; I barely balance my checkbook.  However in reading this story, I found this almost unbelievable, and even asinine:

The bond bank generally lends on the condition that Idaho can intercept state sales tax revenue destined for the local government, in the rare instance that government no longer can make its payments.

In this case, the loan applicant, the North Lake Recreational Sewer and Water District, doesn’t get state tax money. So the resort has offered the property as security instead.

Thus, Tamarack will offer as collateral, land, to help the North Lake Recreational Sewer and Water District case when making the presentation to the MBB.  But how was the state to get the repayment funds from Tamarack?

The MBB board will be meeting on March 4, 2008 in Room 208 (2nd floor)  of the State Treasurer’s temporary office – in the Borah Post Office downtown – at 1:30 pm.