If the market is truly at the bottom, this may be good news for global institutional investors; but individually, we may have a long way to go to climb back to equilibrium. Cause it's not just about markets that is causing financial and inflationary pressures globally and here at home — it is the whole consumer comfortability factor.

If your net worth is less than last year, even if only on paper, you feel poorer and that the family pocketbook gets snapped shut. It does not matter that your net worth is more or less than your neighbours or your friends, you have been accustomed to seeing growth only one way, upwards. Now, it is going the other way.

A couple of weeks ago, Merrill Lynch (ML) announced that they had managed to sell off their entire portfolio of CDOs (collateralised debt obligations) at an estimated 22 cents on the dollar. That ML also financed the sale was widely noted, some would say with enthusiasm.

What really mattered though was that they were able to fix a price on these esoteric debt instruments and that some firm thought they had some value. Because, folks, guess what? Up until that point, no one seemed to want these things, except to write the loss value off a balance sheet.

Once bought, even if sold on for say 30 cents on the dollar, that's a profit of 36 percent in a matter of weeks for the purchaser. If they get sold again and again, why slowly there is resumption of money flow cycles — something that has been sorely lacking for more than 10 months. Where the last big market catastrophe (2000-2002) was caused by complete overvaluation of tech stocks (vaporware) with no fundamentals, current market problems are ones of investor confidence, debt overextension and liquidity.

We, mere mortals, leave projections on these types of financial cycles to the experts; but there are signs from some that the climb out of the barrel (not oil, unfortunately) may be starting. Mr. Greenspan stated this week that the US housing market may recover in first half of 2009; one of the major US construction companies has started to see a bit of a uptick in sales; Jim Cramer of Mad Money stated on CNBC that we have hit bottom, and if he says so, it must be so.

That is the market consensus.

Capital markets tend to move six months to one year, at least, ahead of mass market economics. It may take significantly longer for individuals, states, governments and economies to grow their way back to a complacent reality. And much of that growth, whether tepid or strong, is dependent upon how healthy the economy was to start with.

In the United States, with the population travelling less, consuming less, and contributing less in revenue taxes, all governmental bureaucracies are taking a hit. The state of Utah announced Thursday, August 14, 2008, that all employees are now on a four-day work week — read — with a four-day salary; the state of California placed state employees on minimum wages for an extended period of time; the state of New York has declared an economic emergency.

On broader economic terms, sales of recreational vehicles are off 75 percent from a year ago; it now costs about $500 to fill the tank; US domestic car sales are down more than 35 percent; the reported jobless rate is climbing; county, city and state governments nationwide in the US are feeling the budgetary slowdown and are raising taxes when and where they can; one third of the US nation's homeowner's owe more on their mortgage than their homes are worth; airlines are warning that fares will double and possibly triple; redundancies are being announced with increasing frequency on Wall Street and elsewhere. Walmart, the nation's consumerism barometer, had an astonishing 17 percent increase in sales, year on year. This kind of surge in lowest common denominator sales is very telling; everyone is shopping merchandise at lowest possible cost; everyone is watching their personal pocketbooks.

It probably doesn't need to be stated that the rest of the world 's economic news is similar — with the exception of a few areas. Mexico is battling high inflation; 40 percent of UK housing debt is in negative equity; Australia is hinting of an economic slowdown; Germany is coping with high unemployment and inflation; Euroworld is seeing slowdown in domestic production, etc.

We don't know how any of these market forces will impact our lifestyle here in Bermuda. We know we are seeing slowdowns and that people are feeling purchasing power erosion. We can conjecture, postulate, predict, estimate, and run probability models, but may only have a bit more knowledge than when we started. Unfortunately, one never knows real economic numbers until they become hindsight. What we can do (and should do) every day is set aside a little time to plan for contingencies, no matter what they may be. When you plan for the worst that can happen to you, the anxiety of the present can be greatly reduced.

The 'IF' in LIFE, www.metlife.com. This is one of the most effective marketing campaigns that I have ever seen. Quite frankly, I wish I had access to the communication whizzes who dreamed this one up. It is so, so true. Every life has what if's in it: if the glass is half full; if the death do us part doesn't work; if I am made redundant; if I inherit the earth. If you had three life wishes: would you plan for the future; would you live only in the present, or would you ignore it all?

What would your answers be to the following basic financial questions?

1. If you were told that you (or your spouse, partner, etc.) were losing your job next week, what would you do?

2. If you have maxed our your credit card (notice it states credit card, not debit card), do you have other resources available?

3. If your rental income was reduced by 50 percent, could you continue to cover your general living expenses and mortgage, if you have one?

4. Have you compared what it is costing you to eat, to air-condition, heat water and drive on a monthly basis to last year and the year before?

5. When you shop for groceries, how do you decide what to buy?

6. Do you know many times (besides weekly grocery shopping) do you stop and pick up a few things at the store for lunch, snacks?

7. Where do you think you will be economically two years from now, five years from now?

8. Where do you think our economy will be two years from now, five years from now?

9. Are you happy and satisfied with your economic progress?

10. Do you feel any urgency to be more conservative in your financial lifestyle?

One professional friend paid the column a compliment a few weeks ago. She said that she enjoys the articles, but that she downloads them to read later — but not on a Saturday. After a really hard week at work, she prefers to avoid more depressing news. I can't say I blame her. These are not easy times for anyone — but never forget that you can control economic reality within your own personal domain.

Stay tuned for recession resourcefulness.

Martha Harris Myron CPA -NH1929, CFP® -67184 (US licences) TEP — Society of Trust and Estate Practitioners. She is a Senior Wealth Manager at Argus Financial Limited, specialising in comprehensive financial solutions and investment advisory services for individual private clients and their families, business owners, endowments and trusts. direct line: 294-5709. Confidential e-mail can be directed to mmyron@argusfinancial.bm The article expresses the opinion of the author alone. Under no circumstances is the content of this article to be taken as specific individual investment advice, nor as a recommendation to buy/sell any investment product. The Editor of the Royal Gazette has final right of approval over headlines, content, and length/brevity of article.