Today"s Topic: Some Good News
We have some more good news on the economy. Wells Fargo reported first quarter earnings last week. Goldman Sachs reported first quarter earnings yesterday.

In fact, Goldman Sachs announced that it is planning to issue new common shares for $5 billion. Their intention is to use this money to pay back money received from the Treasury under the TARP program (Troubled Asset Relief Program).
The Federal government now must decide under what circumstances to permit Goldman Sachs to repay. Their pay cap restrictions for the banking giants are predicated on these companies receiving bailout money.

Returning the banks to private control is a long-term necessity but, there could be a lot of wrangling before this happens. Unfortunately, history shows that once government is involved in some area of the economy, it can be a long time (if ever) before the government declares their job to be done and exits the scene.

Students will soon be studying monetary and fiscal policies. They will learn that the massive stimulus programs will increase AD (aggregate demand) for U.S. production. We are beginning to see some evidence on this. The real problem will occur later this year when we will have to consider the inflationary side effects of these programs. We will look at this over the next few weeks.