Buckle Up, Folks

Hey Barry:

Watched your newscast after the mid-term elections yesterday. Understand that you're down a little. But, don't be. Your are fighting the good fight and results will come - just not as fast as right now.

Besides, the DEMS drop off is not that different from earlier elections and completely expected.

There are one or two things I think you should take care of soon, before the new Congress is sworn. And there is another huge problem looming on the horizon.

Extending unemployment insurance and ending the Bush tax cuts are two things you should accomplish soon.

But, the big problem is a deflation that may be coming. Benny and the FED are shoveling money out the door as fast as they can. They are concerned about a Japanese style deflation and also concerned that the new Reps will hamstring any effective action by the Federal Government to restore aggregate demand.

The current recovery is fragile. It still needs some help. The help can come from additional consumer demand, business investment and/or federal stimulus.

CONSUMER DEMAND

Increasing consumer demand requires more jobs and more income for consumers. I know you are totally all over that. You have consistently called for keeping the middle class tax cuts - which will support demand.

BUSINESS INVESTMENT

You probably remember that Keynes called the spirit which moves businesses to invest 'animal spirits'. By that he meant that businesses move in a herd - like sheep. It just takes one firm to make a move, then the rest will follow. Maybe you can jawbone some CEO into making a big investment - can't hurt.

STIMULUS

If Bernanke is right that Congress will not approve any more federal stimulus spending, we may be looking at a deflation and continued high unemployment.

RADICAL SOLUTION

In my radical moments, I think the solution is to empower unions to strike for higher wages, prohibit commercial banks from investing in businesses, break up all the monopolies and oligopolies, enact a 90% income and 'death' tax on the RICH, restrict the free movement of capital out of the country and create a tariff wall so that businesses cannot move all our jobs to China and Malaysia.

And then I wake up.

So Barry, where does that leave you and me?

I think we keep on fighting the good fight and recognize that some events are too big to change; we take our small victories where we can.

It's gonna be a hell of a ride, Barry, buckle up them seat belts.

Your pal,