A Night Without Spam

I woke up to an empty e-mail inbox yesterday morning. None of the usual spam messages had arrived for more than eight hours. The last time I went for more than an hour without an e-mail message, about seven months ago, it was a mail server failure, and the missing e-mail wasn’t delivered until the business day got going around 9 a.m. This time, though, it was just that no messages had been sent to me for the entire night.

I asked around, and other people were also getting less than the usual volume of spam.

This e-mail silence is apparently the result of the arrest of Oleg Nikolaenko, who the FBI estimates was sending 32 percent of the world’s spam at one point last year. He did this using an outlaw program that security experts identify as Mega-D, which broke into millions of home computers just for the purpose of disguising the origin of e-mail messages. That, of course, is a crime, and if Nikolaenko is guilty and receives a sentence proportionate to the harm caused by his activities, he may never get out of jail. So far, however, he is charged only with a single offense that carries a maximum jail term of three years.

With Nikolaenko in custody, Mega-D is winding down, and it may take a few weeks before the criminal businesses that rely on spam for advertising make deals with other spam vendors. In the meantime, we may have a lighter volume of span for a few days.

The FBI caught up to Nikolaenko by following the money he was collecting. It started when they arrested one of his customers, who was a dealer selling counterfeit watches. After talking to a few more people, they had identified one of Nikolaenko’s e-mail accounts, and with that information, they were able to catch up to him on one of his flights into the United States. Any large-scale enterprise can, eventually, be traced this way, because the money to keep it going has to be coming from somewhere.

Vitamin D vs. Winter Weight Gain

A kind of nutritional skirmish broke out over vitamin D this week, when a scientific group raised its recommendations for vitamin D, and government authorities in the United States and Canada responded by warning people not to take too much.

People could get the wrong idea from the government statements. Vitamin D is relatively nontoxic compared to other vitamins. Healthy people in scientific studies had to take a week’s worth of vitamin D supplements every day to produce toxic effects, and even then, it took months of this kind of extreme excess before the first symptoms appeared.

I’ve never known anyone to take vitamin D pills one after another. Rather, the situation most people are in, particularly in the northern United States and Canada and particularly at this time of year, is a shortage of vitamin D. The average person needs more, not less. Trying to scare people away from taking vitamin D supplements (and even the dairy products that have vitamin D supplements added) is sending the wrong message.

The recent government statements on vitamin D are misleading in another way. They emphasize bone health, as if the main function of vitamin D was to hold your bones together. The truth is quite otherwise. Vitamin D is tied into thousands of processes in the body, from hormone levels to metabolism. Vitamin D protects against cancer and diabetes, though scientists are still trying to figure out how this works. In long-term studies, people who take vitamin D supplements die 7 percent less often than people who don’t. It’s not just about the bones.

Vitamin D is the one major nutrient that is directly related to the seasons, if you live in a place that has distinct seasons. In late spring and summer you can get all the vitamin D you need from sunshine, and you won’t need to eat any of it. If you are out in the sun with a small fraction of your skin uncovered for an average of several minutes a day, that’s probably enough. The skin synthesizes vitamin D easily in full sunlight. It is a different story in the winter when the sun is not so bright and people are not outside much. That’s why this is the time of year when people should be thinking about vitamin D. It is this situation that the vitamin D guidelines are intended for. The new guidelines recommend 600 IU of vitamin D per day for adults who don’t get any sun, or up to to 4,000 IU. Notice that the recommendation allows for a very wide range, and chances are, you can exceed the maximum by a factor of 10 without any problems as long as you don’t do so day after day. Besides, the maximum isn’t intended as a limit for a person who has a vitamin D deficiency, but as a guideline for people who are passive about their nutrition, to prevent an excess from building up. Still, the lower number, the reference value of 600 IU, is probably all you need.

You need to know about vitamin D if you are overweight and tend to gain weight in the winter. Urban folklore pins the blame for the added weight on holiday meals, but the scientific evidence points more to vitamin D. More recently, scientists have made a link between vitamin D and seasonal depression. It makes sense to me, if you have any kind of problem with winter, to look at vitamin D.

Vitamin D deficiency is surprisingly common. In the United States, nearly 60 percent of people who are tested for vitamin D are deficient. Of course, people with illnesses are more likely to be tested, but still, only about half of U.S. adults have enough vitamin D to be healthy according to medical guidelines. Obviously, if you are not out in the sun regularly and are not taking a vitamin D supplement, the odds that you are getting enough vitamin D are lower.

The simple answer to vitamin D, if you have the kind of deficiency most people seem to have in winter, is to buy the smallest vitamin D supplements you can find (the bottle will say “D3”) and take one per day — or actually, one every four days would probably be enough. Unlike other nutrients, trying to get vitamin D from food is not necessarily the right approach. Most of the vitamin D you find in food is in milk, and this is a supplement added to the milk (that’s why it’s called “vitamin D milk”). You get the same supplement in a vitamin D capsule, and without the health consequences that come with consuming dairy products.

Even better, as soon as weather permits it, get out in the sun for minutes at a time. Where I live in southern Pennsylvania, I only need a vitamin D supplement between November and March.

Vitamin D is fat-soluble, so it doesn’t so much matter how much you get in one day — it’s more a matter of how much you get over the course of a month. All vitamin D supplements contain more than the daily reference amount, so you may not need to take them every day. A 2,000 IU capsule has enough for 3.3 days, so if you want to be conservative about it, take one every 3.3 days, on average. This works out to 27 capsules over the course of the winter, or 60 if you also take them in the fall and early spring. When you look at how little vitamin D costs, you might ask, “Can you really cure seasonal weight gain and seasonal depression for less than $5?” The answer is, “Yes, if vitamin D deficiency is the cause.” And again, about half of people are short of this vitamin.

You can get a blood test for vitamin D, but the scientific test, taking the vitamin and seeing if your condition improves, costs less. With so many people deficient in vitamin D, many experts recommend vitamin D for everyone who isn’t out in the sun, just on the chance that it might help. When you look at the costs of vitamin D compared to the costs of the diseases it helps to prevent — obesity, depression, cancer, diabetes, and others — this is a recommendation that makes a certain kind of sense.

This Week in Bank Failures

Bank holding companies rarely survive when their banks are liquidated, and the old Washington Mutual holding company is not really an exception. It filed for bankruptcy immediately after the bank was seized, and final arguments in the bankruptcy proceeding are scheduled for Monday. The only really valuable asset the holding company has is income tax credits, but it was such a big company that this asset is worth the trouble to hold on to. The bankruptcy court has the option to transfer the tax credits to a successor company, probably a small reinsurance company that the holding company also owned. In essence, this company will be able to operate tax-free until the tax credits expired. However, it is also possible that JPMorgan, which bought the assets of the failed bank, could end up with the tax credits. If that were to happen, the reinsurance company would probably have to be sold to a well-funded buyer to keep it operating. Washington Mutual shares continued to trade at a significant market value even after the bankruptcy on speculation that there would be enough money to pay some out to shareholders, but so far, there is no indication of that.

The Salt Lake Tribune is reporting that Utah’s Far West Bank is likely to be sold next week to an investment company. The bank has been operating this year under an prompt corrective action notice from the FDIC, which encourages the bank to be sold to a well-funded buyer. The buyer in this anticipated sale expects to add $200 million to the bank to restore its depleted capital.

There have been no bank failures reported tonight, possibly because of technical issues at the FDIC. The FDIC web server was mostly shut down for server changes last weekend and is still not fully functional tonight. If the FDIC is experiencing server problems that go deeper than the web servers, that might be reason enough to postpone any planned bank closings until next week.

Real Estate Investors Holding Back

Everything I’m hearing from the foreclosed real estate market says that that the real estate investors who were buying about a fourth of the foreclosed houses are now holding back, buying much less or hardly anything. The foreclosure market slowed down drastically, people say, between last August and the end of September.

In the foreclosure market, real estate investors are mostly flippers, buying ugly houses, making them look better, and selling them again in less than a year. If they’ve practically stopped buying, it means some combination of:

• They’ve run out of cash. Maybe an investor had set aside money to buy eight bouses, and bought eight, and doesn’t need any more at this point.
• They’re holding on to their cash, expecting better deals in the near future.
• They aren’t confident in selling quickly. It is hard for an investor to make money flipping a house if they hold it for a year or longer.
• They’re more cautious because they’ve taken losses on some recent houses.

None of this is a favorable sign for housing prices. With fewer buyers, the inventory of unsold foreclosed houses will expand, and selling prices will have to fall.

The New Meaning of Credit

Lending and borrowing continue to decline.

• Loans are harder to get. In reports to regulators, banks say they’ve tightened their underwriting since June. At the same time, banks say customers aren’t seeking to borrow as much or as often as they were earlier in the year.
• People are borrowing less. According to the New York Fed, total household debt fell again in the 3rd quarter. Household debt has fallen to levels not seen since 2006. It is 7 percent below its 2007 peak.
• People are using their credit cards less, and even canceling them. The number of consumers with credit cards declined by an estimated 8 million this year. That’s a number that previously had only gone up from year to year. The amount of credit card debt has declined by about one eighth. Credit card debt jumped up at the beginning of the recession, then fell off as consumers became more cautious, but no one in the credit card industry would have imagined this kind of decline even last year.
• Mortgage applications, which picked up modestly with October’s low interest rates, are falling off with interest rates moving up again.
• Savings rates have increased from near zero (at mid decade) to about 6 percent. That is still a low level, and the United States promised the G-20 that it would increase its savings rate. Saving can be seen as the opposite of borrowing, as paying off debts is included in saving in economic statistics.

It seems to me that these are signs of a lasting cultural change in the meaning of credit. For a quarter century, many consumer and business decisions were based on the assumption, “You can always get a new loan.” This allowed businesses to proceed with risky and often reckless business plans, with the idea that more money could be borrowed whenever something went wrong. Suze Orman, on her television show, advised people planning their personal finances that they might be able to use a line of credit to cover emergency expenses. That thinking changed around 2007. Business plans now have to be written with an exit plan, and Suze Orman has been cautioning viewers that if a financial emergency comes up, a credit card account or other line of credit might vanish.

At the same time, Apple has grown to be one of the largest businesses in the world with a policy of not borrowing money, while its deep-in-debt competitors stumbled (or disappeared, as most of them have done). In the past, business people scoffed at Apple’s cautious approach to building its business, but now that it is a blue chip stock, it is more likely to be studied and imitated.

In the last four years or so, a person or company that is deep in debt is no longer optimistically described as “high-flying.” Instead, they are “down on their luck,” or “at the mercy of their creditors” — not a position anyone would choose to be in. A more cautious approach associated with an absence of debt is no longer vaguely scandalous, but is now seen as “lucky.”

I think there are two main ideas that are behind the new meaning of credit.

1. Time pressure. People are under increasing time pressure, and are more aware than before of the time costs that come with borrowing money, and the tight cash management that goes along with this.
2. Control. For a time, easy access to credit gave people the illusion of being in control of their finances. That illusion is fading, and people are looking to patterns like positive cash flow, paying in cash, and money in the bank as replacements.