This is a season of reflection with the harvests in the northern hemisphere and the planting season in the southern hemisphere. We are thus reflecting and wanted to take this opportunity to thank you for your confidence, friendship, and readership.

HOW WE GOT HERE AND WHERE WE ARE HEADED

Every so often it is our policy to review the history of what brought us here to this place in world economic history and thus to see what the economic and stock market future holds.

1. In 1989, The Berlin wall fell and the Soviet Union collapsed. It turned out that the Soviet Union was a much bigger economic failure than western economists had realized and all of the left wing discussion of instituting Soviet-style planned economies stopped in the Western universities, and stopped being practiced by many third world countries.

2. Instead, third world countries took their cue from the newly developed Asian Tigers which grew so nicely in the 1980 and 1990's. At the time, the Asian Tigers were: Hong Kong, Korea, Singapore, and Taiwan. Countries that wanted to develop and to grow began to emulate these countries economic policies which were based upon market capitalism.

3. When China created property rights for foreigners, China received a wave of outside capital investment which continues to this day. Due to this wave of investment, China has developed into the most successful economic story of the new century. India has been more reticent to accept foreign capital and clings to some of the old socialist policies but they too have grown stunningly fast. Simultaneously, the developed countries' economic growth is slowing.

4. Because the social safety net is limited, residents of these developing and newly-developed countries tend to save more than people in developed countries. So a huge wave of savings has accumulated in the developing world. This is a key thing to remember.

5. At the end of 2006 the world found itself with a group of debtor nations with free spending populations...the developed world, and another group of creditor nations with saving populations...the developing world.

6. In 2007 a world financial crisis has developed around sub-prime debt and many of the world's banking institutions and investment banks are shaky. We believe that this crisis will be solved by a four pronged attack.

New capital investments in the shaky banks by developing country companies (in other words; Chinese, Russian, United Arab Emirates and Saudi Arabian companies among others) may redeploy their savings to invest in western financial institutions to strengthen them. The World's central banks will unleash a wave of liquidity to create confidence in the global banking system. An organization will be funded to purchase illiquid debt and make a market in it so that transactions can be carried out. This may be funded by private or government sources in the U.S., and maybe in Europe. The U.S. Treasury and other governments will buy up low quality debt to guarantee financial institutions against excessive losses. Taxpayers will bear the brunt of the folly of banks. THIS BRINGS US TO TODAY

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