Credit Crisis

If you have been paying attention to CNBC or any other business channels that past couple of days you will see that the term Mark to Market is being thrown out there a lot lately. It is an insider term but it really does effect the everyday person and their investments that they might be trying to make in this topsy turvy market.

The term “Mark to Market” definition according to wikipedia is “an accounting methodology of assigning a value to a position held in a financial instrument based on the current market price for the instrument or similar instruments”. This basically means when I have a contract such as a futures contract, when I go to report this contract for accounting purposes I can mark the value of this contract the value that it is the day that I fill it out and not the value that it will be the day it expires.

In 3 months we have lost 1.2 million non-farm related jobs. The only industry that was up was Government jobs. Ladies and Gentlemen meet recession, recession meet the people. You are hearing reports that the economy is bad. The economy isn’t bad, it’s hell on a hot plate. The highest unemployment got in the 2001 recession was 6.3%, we are already at 6.5% and most economist believe that this recession is only at the beginning.  I am not telling you this to scare you, only to warn you that don’t believe anyone trying to sugar coat what kind of trouble the economy is in.

Before the economy busted you kept hearing the talking heads on TV say the the fundamentals of the economy were good and that the media were trumping the problem up. I have not seen not one of those talking heads say, “oops my bad, I was wrong”. The stock market is indeed influence by news but it also is influence by the realities of what was going on in everyday life. The tech bubble that blew earlier this decade was bad but this recession is a whole different kind of monster. We are talking about housing, the biggest investment most Americans will make in their life. Last year around this time you would keep hearing on TV that the “sub prime crisis was contained”. Obviously they were wrong. This is not the time for I told you so, this is the time to listen to your gut more than any talking heads on television. You know better than any professional whether your financial portfolio is sound enough to start spending and investing again.