Global Economist Review

Volumn 1 Issue 2 February 16, 2009

A Review of Fiscal Economics –

Past vs. Present

House Grills Top Bankers on Bailout Progress

Pseudo Economics and the Riskless Society

Page 5

Page 16 Page 10

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CONTENTSGlobal Economist ReviewGlobal Economist Review

Is published FREE bi-weeklyIs published FREE bi-weekly

Publisher and EditorPublisher and Editor

Timothy LuCarelliTimothy LuCarelli

Associate EditorAssociate Editor

Karen SmithKaren Smith

WebmasterWebmaster

Edgar PatelEdgar Patel

Contributing WritersContributing Writers

Jackie ArrgondizzoJackie Arrgondizzo

Thomas RehbergerThomas Rehberger

Frank McGuireFrank McGuire

Steve EvansSteve Evans

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Global Economist Review (ISSN 1946-7230) is published Global Economist Review (ISSN 1946-7230) is published bi-weekly (two times bi-weekly (two times in in a calendar month period) by a calendar month period) by

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Page 2

Economic HeartBeat

A Review of Fiscal Economics - Past vs. PresentBy Jackie Arrgondizzo - Global Economist Review

Page 5

Investment Markets

Technician’s Corner

Answers from Last Issue’s QuestionsBy Frank McGuire - Global Economist Review

Page 8

Trader’s Perspective

Pseudo Economics and the Riskless Society

By Thomas Rehberger

Page 10

Political Infl uences

House Grills Top Bankers on Bailout ProgressBy Steve Evans

Page 16

Global Economist Review February 16, 2009

Editorial

Stimulus – Schmimulus ……. Print Cash

Page 19

From The Editor

Welcome to another issue of the Global Economist review. In our continuing ef-

fort to bring information and unique opinions to our readers this issue presents articles

about the latest stimulus package, fi scal policy and trading opinions. We have also in-

cluded an editorial providing our take on an economic stimulus solution; much diff erent

than anything proposed by any politician or banker. We invite you to read it and post

your comments on our blog. I am sure many people will fi nd much to agree or disagree

within the article. The purpose is to promote critical thinking and hopefully spark mean-

ingful solutions other than the usual responses.

As we continue to build the magazine and website it is vitally important for us to

fulfi ll our readers’ expectations. Therefore, we request your suggestions and patience as

we progress; it will only serve to make this publication great. Please contact me directly

with any questions or suggestions.

Timothy LuCarelli Timothy LuCarelli Editor-In-Chief and Publisher Global Economist Review [email protected]

Page 3 Global Economist Review February 16, 2009

Economic HeartBeat

“Tough times never last but tough people do.” Robert H. Schuller

Page 4Global Economist Review February 16, 2009


A Review of Fiscal Economics –

Past vs. PresentBy Jackie Argondizzo - Global Economist Review

We know that the U.S. Government, and other

governments, are spending a lot of money to

stimulate the economy, but what about the fl ip-side? Where does that money

come from and historically how does spending now compare with the past?

The money initially comes from the government issuing bonds, notes, bills or some other type of debt instrument. These debt in-struments are purchased by individuals, com-panies, institutions or other governments. For instance, we hear from time to time about Chi-na owning the most U.S. debt of any country. The Chinese government, Chinese investment companies and Chinese businesses buy U.S. treasuries. They do this to hold their money in a safe place. U.S. Government securities (debt instruments) are considered the safest in the world because the U.S. has the means to collect the necessary taxes and the country is rich enough to pay back the debt instruments through tax revenues. In fi scal year 2008, the U.S. Govern-ment had revenues of about $2.5 trillion, $1.6

trillion of that was collected directly from U.S. tax payers as income tax. At the end of 2008, the total debt owed by the U.S Government was just about $10 trillion. To draw a com-parison this would be like an individual making $50,000 per year and owing $200,000 in debt; credit cards, car payments, house mortgage, etc. Debt equals approximately 4 times income or income is , 25% of debt; either way you look at it if there was no new debt it would take 4 years to pay off at that yearly income rate. During the 1930’s, President Franklin D. Roosevelt instituted the “New Deal” to stimu-late the then depressed economy. Total revenue collected was 13% to 19% of the national debt until 1942 when it rose to 22%. Understand-ably, World War II had started and manufactur-ing picked up to support the war and the country could afford to pay more taxes. This equated to about a 4 to 7year payoff during the 1930’s and early 1940’s; given no decrease in revenues and no increase in debt. We are currently running a 4-year pay-off and as the stimulus packages are acted upon they will require more debt increasing the over-all debt. Additionally, the shrinking economy will also shrink government revenues. Comb-ing these two scenarios will likely lead to a pay-off timeframe longer than the current 4 years. Below is a chart of data displaying the two time periods; 1933-1942 and then 1999-2008. The debt ratio column is the number of years it would take to pay off that year’s total debt given that years total revenues. The data has been compiled from the U.S. Census Bu-reau and the Government Printing Offi ce. GER



Investment Markets

“Men are like steel. When they lose their temper, they lose their worth.”Chuck Norris

GER

Technician’s CornerBy Frank McGuire

In the last is-sue we presented two charts asking for opin-ions as to what they represented and technically how they are tradable. Well, to give the unknowns, the fi rst chart is the Fed Discount Rate yearly data charted all the way back to 1914. The volatility over the past 35 years has been tremendous. Prior to the mid-seventies the Discount Rate, while moving higher in the longer term, was not raised or lowered in very dramatic steps. In the 1930’s, 40’s and 50’s the Fed made very gradual moves in interest rates. Given that the Fed Dis-count Rate is not tradable it is none the less important as it does infl uence the short and longer term interest rate markets; bonds notes and bills which are tradable. The second chart is the S&P 500, guessed correctly by one blogger. It is the monthly data going back to November 1987; the month after the 1987 correction. At this very point in time the chart has a very good double top forming. If the market closes much below 800 for a several week period of time, then the double top will be confi rmed. Technically speaking, if that were to happen, 450 is the next stabil-ity point. 450 would also be about a 66% (2/3rds) re-tracement from the S&P highs of over 1500.


0

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1914 1924 1934 1944 1954 1964 1974 1984 1994 2004

Calendar of Economic Events

for

Remaining Period in February

Global Economist Review February 16, 2009Page 9

Trader’s Perspective

How did we get here? There are many different factors that lead to the largest economic downturn since the Great Depression. We all know that housing, subprime, Fannie and Freddie, the banks, lending practices, the rating agencies, CEO’s, Wall street, mortgage brokers, Con-gress, the Fed, the Fed policy and the President’s policies are all accessories. They were all in the car when the crime was committed. Who was the driver or the triggerman? It will be hard to say, since they all seem to have alibis. The only thing we know for sure is that the American people are going to pay for one of the greatest economic debacles of the century. Added to that, the banks and brokers sold toxic paper to many countries around the world. The rest of the world is going to pay as well, not only for the bad notes we sold them, but for the recessions and declining economies to come. It is true; we have to act quickly to stem the tide of red ink hitting almost all sectors of our economy. We need to slow the descent and give people and companies time to react to the prob-lems. The government will become the economic driver for the next three to fi ve years as business restructures and defaults and failures occur. But maybe more importantly, the government has to restore some clarity to the future progress of our economy. Clarity is the most important factor in making decisions about committing capital. Investing, the ability to make a judgment about a company or municipality rests on the fact that we can turn to metrics to give us a clear view

Pseudo

Economics and

the

Riskless Society By Tom Rehberger

Global Economist Review February 16, 2009 Page 10


of how secure that company or municipality is. There are two factors in judging risk, the risk of the asset and the overall economic risk. We can usually look at a stock or bond and determine how secure it is versus other companies in the same sector. But right now, the uncertainties of the overall economy are making all assets look bad because the economic risk is high. What can be done to change all of that? Clarity. We need the government and business to step up and set a course that we can understand, will of-fer some clarity. They need to bring confi dence to the party, and fast. What caused all the obscurity? It is easy to point to a number of major factors that are causing people to feel a low degree of confi -dence in the economy. Here are just a few.

• Out of at least 15,000 professional econ-omists, “10 or 12 foresaw the mortgage crisis.” * Economists have low credibility.• Rating agencies in many cases gave high ratings to the toxic fi nancial products and now have low credibility.• Banks and brokers needed a bailout and now they have low credibility.

• Congress was involved in changing the rules on banks and brokers to give them more access to leverage and pushed for more low income people to buy houses. Congress now has low credibility.• The Fed’s models missed the downturn and possible defl ation until late in the game. The Fed now has low credibility.• The same people are still in charge of most of the fi nancial institutions from when they created the products that got us here. The CEOs and management have low cred-ibility.• The fi nancial institutions played fast and loose with home mortgages. Mortgages were and still need to be the bedrock of in-vesting. Mortgages have low credibility as investments.• The SEC turned a blind eye to the largest ponzi scam in the history of this country. They have low credibility.

These are all opinions of mine, shared by many. We count on all of these people and institutions to set the conditions for economic growth. They are the underpinnings of the econ-omy and they all got it wrong. We have not yet


reached the point; if ever, where the government and business will accept the responsibility and make the necessary changes to bring back the checks and balances that keep outrageous be-havior from taking over. The incentives were too great and are still at the center of the bailouts. The stock market, on the other hand, is tell-ing us with a great deal of certainty that we had better get a plan. The market is saying that we will continue in a downtrend until we get clarity. It is also saying that the fi nancial sector will shrink and some of the large banks and brokers must be nation-alized, dismantled and restructured as smaller, more effi cient companies, or sold. Capitalism will force the change if we don’t do it. What will cure the low confi dence in gov-ernment and business? Is Nero fi ddling while Rome is burning? Will the peasants eventually burn down the castle? While it is nice to specu-late that the people will eventually right the ship that our leaders cannot, this correction takes a long time. We as Americans will change our leadership a number of times until the leaders get it right. Along the way, social upheaval and war are a normal consequence of this type of market debacle (see WWII). Plan for diffi cult times ahead! What will cause the institutions and fi nan-cial sector to restore some confi dence and get the economy moving again? Sad to say, we will return to many of the rules and laws that were in place from the last downturn. Those old rules, coupled with new checks and balances, will re-

vive clarity and confi dence. They will then re-main in place and the economy will grow until we forget them again, in the next cycle. Next time let’s go for 100 years!

Why do I call it pseudo economics and the riskless society? You can’t have re-ward without risk! We wanted easy money, high leverage and high returns with low risk. In order to get things so wrong, we had to build up many wrong assumptions (pseudo economics) that peo-ple came to believe in. Think about all of the people involved in this debacle. Some of them

are college professors and businessmen and women, some of them congressmen and sena-tors who all slowly bent the rules. The econo-mists and rating agencies built models and gave opinions based on misguided data and incen-tive. The fog of the pseudo economics has been building up over a long period of time. We are mired in it now, and it will not lift until many of the misguided rules and laws are dissected and discarded. We cannot hedge, structure, legis-late, or wish away risk. Capitalism is supposed to work this way. Failure means the restructur-ing of damaged businesses and bankruptcy of broken ones. Success means buying or taking market share from those who fail. Democracy is the peaceful change of governments, some good and some bad. You can’t create a riskless society. If reward is present, then remember that risk is being shouldered by someone. Compa-nies should never be too big to fail and gov-ernments should never perpetuate themselves,

What will cause the

institutions and

fi nancial sector to

restore some

confi dence and get

the economy

moving again?


and change is good. There is risk in capitalism and Democracy for a reason: the rewards. Suc-cess and failure are both grand opportunities for somebody, and both should be embraced. Capitalism comes with booms and busts. We dropped our guard and believed in the hype. Huge rewards were taken by a few and the risks were allowed to be spread over the rest of us. This pseudo economics must never be allowed to happen again. Risk must not fall on society because a few prospered. We had safeguards in place and they were removed. The system is not broken; it is just being distorted until the fi nancial sector shrinks. The road back to growth will be painful, but it will be quicker if the Obama administra-tion gets it right and swiftly moves us back into the realm of clarity. If they continue to perpetu-ate the pseudo economics, expect a long four years!

We all must realize that we will never achieve true capitalism or true democracy. We live in the gray areas of both, but these are still great goals. We will restructure the failed busi-nesses and shrink those that are too big to fail. We will reelect governments until they get it right. A few heads will roll. We will reinstitute checks and balances that will get us back on track. Clarity and confi dence will return and then the economy will boom. We will learn from this economic debacle and then, hopeful-ly, create a longer period of growth then the last 80 years that we have enjoyed.

Tom Rehberger President Private Asset Group LLC www.INVESTpag.com*James K. Galbraith economist - excerpts from NY times interview.

GER

Disclaimer: This letter is the opinion of Tom Rehberger and is not the opinion of Private Asset group. It may contain forward looking statements. This release contains “forward-looking statements” within the mean-ing of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act

of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. “Forward-looking statements” describe future ex-

pectations, plans, results, or strategies and are generally preceded by words such as “may”, “future”, “plan” or “planned”, “will” or “should”, “expected,” “anticipates”, “draft”, “eventually” or “projected”. You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to diff er materially from those projected in the forward-looking statements, including the risks that actual results may diff er materially from those projected in the forward-looking statements as a

result of various factors, and other risks.

This article shall not be construed or interpreted as a solicitation to sell or off er to sell any fi nancial assets or investment advisory services by Private Asset Group or Tom Rehberger. Please contact Private Asset Group

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Political Influences

“Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.”Sir Winston Churchill, Hansard, 1947

The chief executives of eight major US banks tried to reassure a doubting Congres-sional committee last week that all’s well with their oversight of federal bailout funding for fi -nancial institutions. Meanwhile, the U.S. Trea-sury is considering whether $1.5 trillion in new taxpayer funding may be needed to shore up the US fi nancial sector and resusci-tate the economy. There is no consensus on whether the bailout plan is ac-tually working. Executives with Citi-group, Bank of America, JP Morgan Chase, Wells Fargo and others told the House com-mittee they had used bailout dollars to increase lending in the last quarter, while relieving “hundreds of thousands” of ho-meowners from looming foreclosure. The eight banks have received $166 billion of the $700 billion in the Troubled Asset Relief Program (TARP) developed last fall by the Bush Admin-istration. Members of the House committee grilled the bankers on the extent of their lending, their accountability for taxpayers’ money, and de-manded an explanation for bonus pay and in-centives for top executives in a time of fi nancial crisis. Citigroup and Bank of America have each received $45 billion, making them the largest benefi ciaries of the government’s bailout plan. The dollar amount of lending since the bailout began was of less interest to lawmak-

ers than whether the taxpayer-funded program is actually benefi tting the U.S. economy. And there was little evidence to support an affi rma-tive answer to their question. “There’s a great deal of anger in the coun-try, much of it justifi ed,” Committee Chairman Barney Frank, D-MA, told the executives as

the hearing began. Citigroup’s Vikram Pan-dit vowed his bank would pay the U.S treasury $3.4 billion in annual dividends, saying he intends “to make this a profi t-able investment” for the gov-ernment. Pandit said he asked for an annual salary of $1 with no bonus until Citigroup is profi table again. He also told the committee that his bank had helped 440,000 homeown-

ers avoid foreclosure since the bailout program began in October. “The American people are right to expect that we use the funds responsi-bly, quickly and transparently,” Pandit said. JP Morgan Chase CEO Jamie Dimon said the $25 billion his bank had received en-abled it to delay repossession proceedings on mortgages of more than $22 billion held by about 80,000 homeowners. “Today’s economic crisis is a result of a lot of mistakes by a lot of people,” he told the committee. Perhaps in a move to defl ect criticism before the House hearing even began, Gold-man Sachs CEO Lloyd Blankfein had proposed greater regulation of the fi nancial sector and

“There’s a great deal

of anger in the

country, much of

it justifi ed,”

Committee Chairman

Barney Frank, D-MA,

told the executives as

the hearing began.


House Grills Top Bankers on Bailout Progress

by Steve Evans

tighter limits on executive compensation pack-ages. But committee member Gresham Barrett R-SC, scolded the bankers anyway, saying, “My folks simply haven’t seen the evidence that the money you were given is working or making their lives better.” Lawmakers asked Bank of America CEO Kenneth Lewis to explain why investment bank Merrill Lynch gave billions in bonuses to top executives and mid-level management just as it was in negotiations to be acquired by Bank of America – in effect, to be saved from bankrupt-cy. Earlier reports revealed that four top Merrill Lynch executives took home $121 million in bonuses mere days before Bank of America re-ceived $45 billion of taxpayer funds to buy the troubled investment bank. Merrill gave away $3.6 billion in total bonuses less than a week be-fore the Bank of America merger went through. The bonuses are now under investigation by the New York Attorney General’s Offi ce. Lewis said Bank of America had urged the Merrill executives to cut or eliminate bo-nuses. “We had no authority to tell them what to do; just urge them what to do,” Lewis told the committee. He stressed that no one in Bank of America management had received any bonus package during the Merrill Lynch acquisition. Also appearing at the hearing were Rob-ert Kelly of Bank of New York Mellon Corp., Lloyd Blankfein of Goldman Sachs, John Mack of Morgan Stanley, Ronald Logue of State Street and John Stumpf of Wells Fargo. Stumpf said responsible lending spurred Wells Fargo to profi ts of $3 billion in 2008 (off-set by a $2.55 billion fourth-quarter loss). His bank has since acquired North Carolina-based Wachovia in an $11.7 billion deal. In buying the smaller bank, Wells Fargo absorbed $219 billion

of commercial real estate and corporate loans, and a large portfolio of at-risk home mortgag-es. The acquisition was largely responsible for Wells Fargo’s precipitous forth-quarter loss. Lawmakers also asked the bankers to disclose much of their own money they had in-vested in their companies since August. Dimon testifi ed he had invested $12 million of his own money in JP Morgan Chase, Pandit said he had pumped $8.4 million into Citigroup, and Lewis said he had bought 400,000 shares in Bank of America. The other executives said they did not make investments in their banks. The larger, unresolved issue on Capitol Hill is ongoing criticism of the bailout itself. Critics are essentially divided into two camps on the thrust the bailout ought to take. One side argues that more taxpayer mon-ey should be pumped directly into the fi nancial sector so bankers can increase lending. Whether enough lending is taking place since the bailout began is an unanswered question. The other camp argues that the U.S. gov-ernment ought to buy troubled mortgages in-stead of buying securities instruments whose returns are based on the performance of home mortgages. This argument may be more politi-cally palatable in the House and Senate, as sav-ing homeowners would likely be seen as more popular than bailing out Wall Street, which many lawmakers say is to blame for the fi nan-cial crisis. Securitized portfolios of subprime loans, shuffl ed among fi nancial institutions un-aware of the risk they were assuming, are at the heart of the economic meltdown. But economists say U.S. consumers are also to blame. Inadequate consumer savings and households already heavily leveraged with debt are exacerbating the situation as fi nancial insti-tutions clamp down on lending and new credit dries up. Without an adequate savings cushion,


families are avoiding major purchases and cut-ting back drastically on discretionary spending, which is further weakening the economy. Before the House hearing, Treasury Sec-retary Timothy Geithner had announced a new, $1.5 trillion bail-out package for fi nancial insti-tutions, including a new fund to mop up any re-maining bad debts on banks’ balance sheets. His plan calls for at least $100 billion in taxpayer funds to support up to $1 trillion in consumer, small business and commercial real estate lend-ing. Geithner also told Congress that a supervi-sory review of banks would soon tell how much additional money is needed to stabilize the U.S. fi nancial system. He expects to give Congress

an updated report by mid-March. As part of the ripple effect on the stock markets with any new development on Capitol Hill, U.S. stocks plunged on news of Geithner’s bank-rescue plan, which Congressional leaders dismissed for its vague details and uncertain numbers. “I completely understand the desire for details and commitments, but we’re going to do this carefully, consult carefully so we don’t put ourselves in the position again where we’re lay-ing out details ahead of the care and substance necessary to get it right,” Geithner told Con-gress.

GER




EDITORIAL

While many of us here at the Global Economist Review may not hold key political positions that are capable of making decisions to rectify the economic mess, we are none-the-less highly educated, experienced people with intelligent opinions. Since it seems as if ev-eryone else is giving their suggestions to the government on what to do about the fi nancial debacle, we thought we too should throw in our two cents; for what its worth. From our point of view what really needs to happen is cash needs to get into the hands of people that need the cash; if they need it they will spend it, thus increasing economic activ-ity. Additionally, banks need to get bad debt off their books. Most of that bad debt comes from people not being able to pay their mort-gages because they are either out of work or they have taken a pay cut. Unemployment in-surance has a limited time frame and for many

the monthly amount does not cover their rent or mortgage payment. Many people never col-lect unemployment because they are ineligible, waited too long or were self employed. The President and Congress’ answer to economic slowdowns is to throw money at the problem via tax relief or government spending. The Federal Reserve and Treasury use inter-est rates and fi nancial infusions/guarantees to stimulate economic activity. All of these, with the exception of interest rate adjustments, in-crease the national debt which eventually has to be re-paid out of taxes, nullifying any long term economic recovery. To break everything down into basics two things need to happen; cash needs to get into the hands of people and there needs to be no further government stimulus programs that will hinder long term economic recovery.So here’s our “New Deal” outline:

Stimulus –

Schmimulus ……. Print Cash

Editorial Provided by Global Economist Review – Online Magazine

Global Economist Review February 16, 2009 Page 20

1) In our opinion the government was on the right track to create a “bad bank” that would buy up all the existing mortgages that are in default. The problem is they became scared at the sheer size of the debt. The government also felt pres-sure to not purchase the assets from the banks at the book value but at some sort of discount. Our suggestion is use the money that has been appropriated in TARP and the new stimulus package to buy every mort-gage loan (that is greater than 90-days late) possible from the banks at their book value and put it into this “bad bank”. Convert all the mortgages purchased to 30-year fi xed rate loans at 5.5%. Some estimate the total amount of delinquent mortgages to be over $4 trillion so, if the “bad bank” acquired a little over $1 trillion it would start the ball rolling.2) Print cash; real, hard, physical cash. Make the presses work 24 hours a day 7 days a week. Printing cash does not increase national debt and never has to be paid back.Yes, we know that would be infl ationary and devalue the dollar. But, we have an answer for that as well, read on!3) Start a voucher system through bank branches to pass out the cash. The government can set up a secure website for people to sign up. They would have to pro-vide their Social Security number, name and contact information of the bank hold-ing their mortgage (or landlord if renting), the names and contact information of two of their utility companies (this is to veri-fy they still reside at the residence), and a couple of other creative verifi cation pro-cedures that are not too cumbersome and would prove unemployment (or underem-

ployment); they would have to prove their fi nancial woes were because of the econo-my and not from criminal or self-infl icted distress. People would then be eligible to receive double their monthly mortgage payment or rent in cash; up to a maximum of $3,000 mortgage payment ($6,000 per month total payout). They would need to choose a local bank that would then accept their bi-weekly voucher. The bank would receive an allocation of cash each week based on the number of registered vouch-ers to that bank. Upon presentation of the voucher the bank would immediately wire half the funds to the mortgage holder or lease holder and distribute the remaining cash to the voucher holder.4) As the economy starts to recover keep the program going and, to avoid over-heating the economy, start downsizing the government. As GDP increases, tax dol-lars will increase, then the government can start to cut back and pay off it’s debt. Dramatically cutting back on government spending would have a dampening affect on the economy counteracting the stimulus provided by free-fl owing cash. Slowly the voucher system could be eliminated, the government would have substantially less debt and the dollar would increase in value as national debt was paid down.

While we acknowledge the devil is in the details and a few hundred words of text cannot suffi ciently specify all the intricacies of the pro-gram, we do believe the plan warrants consid-eration and feedback. We have therefore asked several industry experts for their opinions:

We are in a recession. We’ve been in them before, we will be in them again. Nev-ertheless, our system and laws have resulted in

GER

the greatest increase in human wealth ever. In the past 25 years, free markets have resulted in raising the largest number, and largest percent-age of the world’s population out of poverty, ever. Capitalism entails huge amounts of wealth creation on average, but for poorly understood reasons, a bumpy ride. We are currently on the downside of that bumpy ride and should simply accept it. This too shall pass. Lots of coun-tries over the last 150 years have had fi nancial crises. They’ve recovered. The idea that we have to do something as crazy and drastic as this proposal is, well, crazy. Professor Christopher PhelanDepartment of EconomicsUniversity of Minnesota

Initially I found your idea repulsive. It conjured up visions of people living on the dole, queuing up for the monthly check to feed the kids. But giving massive bonus checks to executives of large banks and brokerage fi rms is really no different. It is compensation for no real work, risk or lasting value when the fi rm is losing money. The real difference is that the poor will spend it and the rich will invest it. Which is better? While I don’t believe in long term transfer payments, I do think we need more spending right now. We do need to sup-port the middle class, and the working poor. We need consumption!Tom RehbergerPresidentPrivate Asset Group LLC

We recognize the elected politicians feel an obligation to the companies and inter-est groups that helped pay for their election; however, now that they are elected they need to do what is best for everyone. The top down approach, fl ooding the banks, investment com-


panies and country’s rich, with cash does not seem to be working. We ask each and every reader; how is this solution any different than unemployment, food stamps or any other type welfare? Is this solution any more wrong than the Socialist progrms we have been practicing since the Depression of the 1930’s? We in-vite you to post your comments on the Global Economist Review blog.


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