Wednesday, March 11, 2009

It's "Tick" Season

I attended an event hosted by UBS Private Wealth on Monday that featured a discussion with their Chief Lobbyist, John Savercool. He offered some very well-formed thoughts on where this current administration was focused in terms of programs and legislation. One of the things he mentioned was the possible re-institution of the "uptick" rule, and a suspension of the "mark-to-market" accounting rules that have forced so many Banks to write off huge numbers of non-performing loans.

While the Market responded favorably to these potential changes, there are still a huge number of debt-related issues on the table. Yes, consumer debt - primarily credit card debt - actually rose last month after contracting for almost three. But this is not necessarily a good thing. Perhaps you have noticed, as I have, that more and more people are using credit cards to pay for groceries and other consumables. This would stand to reason because once cash reserves or unemployment checks run out, this may be the only resort for the growing unemployed before they have to resort to food stamps.

Women of Wealth tend not to have these immediate concerns and hopefully you have received good advice from your current advisors and have a Plan of Action to support you during these difficult times. Still the debt that has been created through the liberalisation policies of the Federal Reserve for more than a decade will take a long time to work through - perhaps even decades to come.

Those of you that know me are aware of my distrust of the "Fractional Reserve" Banking system and its "pluck from air" creation of money with no backing (gold, silver, etc). Here is another take on the "quantitative easing" and "de-leveraging" of the banking system in a recent post by Jackie Zehner.

Bottom line is that, in my opinion, we should not be lured into a "sucker's rally" that has caused a temporary uptick in capital markets. Even though Citigroup reported profits for the first two months of this year, there are signs that more debt is about to default.

But don't just take my word for it. Pay a visit to your local supermarket and find out for yourself.

Until next post, continue to achieve, believe, receive. SDG - JBHIV

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