Presented by Jerry Lynch

1. Life After Stimulus: When Reflation Meets Deleveraging Presented by Jerry Lynch The material contained in this presentation has been prepared solely for informational purposes by General Re-New England Asset Management, Inc. (“GR-NEAM”), and is not to be distributed outside of the organization to which it is presented. The material is based on sources believed to be reliable and/or from proprietary data developed by GR-NEAM, but we do not represent as to its accuracy or its completeness. This is not an offer to buy or sell any security or financial instrument. Certain assumptions, including tax assumptions, may have been made which have resulted in any returns detailed herein. Past performance results are not necessarily indicative of future performance. Changes to the assumptions, including valuations or cash flows of any instrument, may have a material impact on any results. Please consult with your tax experts before relying on this material. Additional information is available upon request. This document and its contents are proprietary to GR-NEAM. They were prepared for the exclusive use of your company. Neither this document nor its contents are to be given or discussed with anyone other than employees, directors, trustees or auditors of your company without our prior written consent.

3. Conclusions Deleveraging Recession Policy Response Global

4. U.S. Real Economic Growth Cyclical Secular Global Forces Stimulus Fiscal/ Monetary Stimulus

5. Where Are We Now?

6. Real GDP Growth

7. Unemployment Rate vs. Broader Total Unemployed*

8. New Home Sales and Recessions Source: www.calculatedriskblog.com

9. U.S. Real Consumer Spending Y/Y % Dec. – 1.7% Source: ISI

10. Capital Utilization Manufacturing (SIC) SA, % of Capacity Source: Federal Reserve Board, Merrill Lynch

11. World Industrial Production Source: Big Picture.com

12. Sources of Remittances by Recipient Regions, 2008 Source: Global Economic Prospects 2006: Economic Implications of Remittances and Migration (World Bank). World Development Indicators 2007 and Global Development Finance 2007

13. Recession Non-Classic Classic

14. Classic Recession • Characterized by: • Inventory cycle • 80% of decline in GDP due to de-stocking in manufacturing sector • Traditional stimulus almost always works to absorb excess by stimulating demand • Lasts 18 months • Non-Classic Recession • Characterized by: • Balance sheet compression • Deleveraging • Debt elimination • Rising saving rates • Expansion of government’s balance sheet to offset contraction in private sector • 3 years or more

15. Job Losses in Recent Recessions Source: www.calculatedriskblog.com

16. Current Recession Job Losses* in Post WWII Recessions Source: www.calculatedriskblog.com

17. Current Recession Job Losses in Post WWII Recessions Source: www.calculatedriskblog.com

18. Low Interest Rates Liquidity New Banking System Confidence Leverage Leverage

19. Claims of Banks on East European Countries, as % of GDP Source: Big Picture.com

20. Deleveraging Deleveraging Leverage Deleveraging is a process not an event.

21. = 100% GDP Components of GDP Consumption 70% + Investment 16% + Net Exports <1>% + Government 15% Source: BLS, GR-NEAM Analytics

22. Total U.S. Debt

23. The Leveraging of America The New York Times April 4, 2009 Source: Federal Reserve, via Haver Analytics

24. Leverage

25. Consumer Source: NY Times

26. Consumer

27. GDP Growth GDP Growth: With and Without Mortgage Equity Withdrawal

28. Record Wealth Implosion Households & Nonprofit Organizations: New Worth Difference – Year to Year NSA, Bil$ Source: Federal Reserve Board, Merrill Lynch

29. Market Cap

30. Stimulus

31. Summary Disbursements or Committed Funding Potential (in billions) (in billions) Federal Reserve1,238 4,316 Treasury 332 3,912 Other Agencies 1 2,207 1,571 10,435 MEMO: U.S. Nominal GDP, Estimated 2008 $14,500 Billion

32. GDP in U.S. Dollars Source: www.ritholtz.com

33. It’s a Non-Classic Recession Mean Reverting Process

34. PCE as a % of GDP & Population Demographics

35. Personal Consumption Expenditures (PCE) & Household Debt

36. Savings Rate Must Rise, And It Will Personal Saving Rate SAAR, % Source: Bureau of Economic Analysis, Merrill Lynch

37. U.S. Homeownership Rate From 1965-2008 Source: GR-NEAM Analytics

38. Total Household & Business Credit/GDP: Ratio Source: Federal Reserve Board, Merrill Lynch

39. Conclusion • Ability of Policymakers to: • Recreate Credit Cycle • Reinflate Asset Values • Ignite a Consumer Led Recovery • Inhibited by Secular Change in Attitudes Toward: • Savings • Credit • Discretionary Spending • Homeownership

40. New Normal Global Economic Drivers China

41. Chinese Banks’ New Loans Source: CLSA

42. Capital Markets

43. Worst Decade Yet

44. Growth in Total U.S. Credit Market After-Tax U.S. Corporate Profits

45. 10yr U.S. Corporate A vs. 10yr U.S. Gov’t on the Run Source: GR-NEAM Analytics

46. = Developing Economies United States = ??? United States $ = International Domestic = Higher Inflation Deflation Restrained Capacity Collapse in Demand = = Theme Secular Cyclical Growth Story Currency Foreign Sales Trade Inflation Energy Source: ISI

48. Major Foreign Holders of U.S. Treasuries

49. Foreign Exchange Reserves Source: IMF

50. Composition of Foreign Exchange Reserves (Allocated) Source: IMF