The US government has certainly made tremendous efforts to get the economy out of the current recession. According to Bloomberg, the government has already spent an incredible $13 trillion in this effort! Expect a lot more "stimulus" to come and for the US to go even deeper into debt.

Is the money being spent wisely? Probably not. A good example of this is the latest plan brought forth by Treasury secretary, Timothy Geithner, to buy toxic assets from the banks.

Mr. Geithner has proposed a so-called public/private partership to buy these assets. It's not really much of a partnership, however, since the government (taxpayers) will be putting up 90% of the money.

The "partnership" is structured poorly. If the purchases of the toxic assets goes well and results in profits, the lion's share of the profits will go to the private participants. However, if the purchases go poorly, the vast majority of the losses go to the government (taxpayers).

It's the same old Wall Street game - heads, Wall Street wins; tails, you the taxpayer loses. In other words, gains are privatized but losses are socialized. I continue to repeat - Tim Geithner is too much of a Wall Street insider to bring about real reform.

I urge everyone to read an article in the latest Atlantic monthly by Simon Johnson called The Quiet Coup. Mr. Johnson was former chief economist for the International Monetary Fund (IMF) in 2007 and 2008 and is currently a professor at MIT's Sloan School of Management.

In the article, Professor Johnson states we face two major interconnected problems. The first problem is the desperately ill banking sector that threatens to choke off any incipient economic recovery generated by all the government stimulus.

The second problem, Professor Johnson states, is a political balance of power that gives the financial sector a veto over public policy. He believes that the proper course of action would be to nationalize the major Wall Street banks on a temporary basis.

STOCK MARKET RALLY

The stock market has enjoyed a good rally recently. Why? First of all is the above-mentioned Geithner plan which will greatly help Wall Street.

Secondly, on Thursday US accounting rulesmakers announced changes to their mark-to-market rules. Mark-to-market means that companies, such as banks, were forced to mark down items, such as bad loans, to whatever the current price is no matter how low. Banks would have to realize billions of additional dollars in losses.

But now banks can use mark-to-model. This means banks can value loans at whatever some theoretical model says they are worth. In other words, this is mark-to-fantasy. Wall Street banks can continue lying and say that the loans on their books are worth a lot more than they really are.

Wall Street rallied 4% of this news that they can continue lying. This will allow Wall Street banks to look healthier than they really are. This, of course, will allow the bonuses and perks to continue to flow freely on the taxpayers dime.

Wall Street, with help from Washington, continues to go down the path of business as usual. I continue to believe that a new bull market in stocks will not get started until trust and integrity is restored to our financial system.

As always, please feel free to contact me directly with any comments or questions.