I was too quick on Tuesday to claim that the verdict was in.  Tuesday being the last day of the quarter and the financial year in the UK, saw a big rally without reason other than “window dressing” for the end of the financial year.  One hundred and sixty points up would have made a difference to major portfolios.  Now to see if the rally can continue.  The FTSE still has not made the 4,000 level resistance, perhaps this time.

The US took the dive on Monday re GM and the banks but has since made up half that drop from Friday and Monday.  Although the correction did not continue, I feel it is inevitable that the bears will win this fight and another drop is in the wings.

I saw a bloomberg article yesterday that stated that the US has spent, or promised to spend and borrowed 12.8 trillion.  This is a stagering amount.  (click on 1 trillion $ on the recommended links)  It has been said that GM is not a viable business in its current form.  The same can be said for the US economy.  There are only two options, default or inflation.  As the US is unlikely to default inflation is the only answer.  It is just a matter of over what time period.

There have been calls for the US$ to be replaced as the reserve currency.  If this were to happen then the US will be in dire straights.  It is only because the US$ is the reserve currency of choice that has kept things going for so long.