October 2009

There are quite a few credit card companies and banks raising rates right now on many customers.  Even those with high credit ratings have not been able to escape the flood of interest rate hikes, all timed to go into effect before the new laws that restrict the companies even further come into play in February.  Millions of consumers have been up in arms and voicing their feelings about these rate hikes, and I’m certainly one of them.  I don’t like how companies are trying to milk every last penny out of consumers before they have to limit their out of control behavior.  But there are a couple of caveats to the argument against the credit card companies raising their rates and treating their customers poorly.  While I don’t think any company should abuse their customers or treat them unfairly, all of the credit card debt people are finding themselves in has its roots in their own fiscal irresponsibility.

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The UN has begun to echo China, Russia, France, and India’s calls for the US Dollar to be stripped of its position as the world reserve currency.  For the past year or so, SDR’s have been looked at as a replacement for the dollar.  These SDR’s are made up of many different currencies weighted differently.  They take into account the fact that the global economy is no longer made up of a few huge isolated players, but instead is more interconnected and interwoven.  The SDR basket of currencies would likely be a more efficient reserve currency; at least it would be fairer to other non-superpower countries that are looking to emerge from this most recent recession as key global economic players.  This news however, adds insult to injury for the broken US economy.  Not only are the talks of a reserve currency switch already starting to hurt the Greenback, but the US Dollar has already seen more than its fair share of devaluing over the past year.

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What if there was an even larger economic stimulus than the one that was passed earlier this year, and it didn’t come from government but instead came from corporations themselves?  It’s hard to imagine, but this economic stimulus package would benefit consumers, employees, and the company’s bottom line all at once without costing taxpayers a single dime.  Sounds too good to be true doesn’t it?  It’s not impossible and there is likely more than one way to accomplish something like this, but putting a plan into action is the hardest part.  All people would have to do is get the ball rolling.

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In this economy it’s often very hard to know which financial decisions are smart and which ones are less so.  There are fears over inflation, interest rate hikes, more economic downturns, currency instability, and the availability of credit just to name a few.  Without a proper plan or road map it’s nearly impossible to remain afloat financially, especially if you have a large amount of high interest debt.  Now, more than ever, people are being turned on to investing.  These people are beginning to see the benefit of saving more money for their future.  These same people often make some very fundamental errors when it comes to deciding when and how much to invest.  These investors would be much better off taking inventory of their debt and working to pay that debt down.

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The Stock market is officially in unknown territory and that is making a lot of investors very nervous.  There is so much money waiting to pounce on a sure bet recovery that the market has been starved since last year of much of the needed capital for a real recovery.  Not to mention that the recovery cannot take place in earnest until jobs are once again created in the US, but that’s another matter for another article.  The issue that many investors are having is not a matter of confidence; it’s a matter of life or death.  Will the commercial real estate bubble burst and drag the rest of the US economy down with it?  Will the fragile recovery that we have seen so far extend into 2010 and generate real growth and real wealth for more than just a few key players?

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The downward spiral of the US Dollar has reached near terminal velocity with the news that oil purchases worldwide will no longer be denominated in dollars but instead in a virtual cornucopia of currencies as well as gold.  This news came as the Chinese were being asked to strengthen their currency and as the Russian government, along with the Chinese, the Indians, and many in the Persian Gulf had been trying to knock the US Dollar from its perch as world reserve currency.  This struggle has been going on for years, but has really heated up in the wake of the world economic recession and the fears that were created by US debt and its relative economic health.  There is no doubt that a shift away from US denominated oil contracts will negatively affect those holding US Dollars, but the affect it will likely have on the US economy as a whole

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