I’m not too optimistic about 2010. Below are my prognostications in the areas of the economy, domestic politics, global geopolitics, and the investment markets. Words: 681
In further edited excerpts from the original article* James Quinn (www.seekingalpha.com) goes on to say:
1. Double Dip Recession Will Commence by June of 2010
To date, the Federal Reserve has printed
a) $700 billion wasted on a bank bailout,
b) $787 billion wasted on a stimulus package
c) $3 billion wasted on Cash for Clunkers ($24,000 per vehicle),
d) $28 billion squandered on the $8,500 homebuyer tax credit, and
e) $300 billion of mortgage-backed securities purchased by the Federal Reserve and Treasury and all we’ve received is a 2.2 percent increase in GDP. As the government stimulus winds down in the first half of 2010, the true weakness of the economy will reveal itself.
2. Official Unemployment Rate Will Grow to More Than 11% by Late 2010
With the economy sinking back into recession, the true non-government manipulated figure will approach the Great Depression levels of 25 percent. The side effects from this fact will ripple through the country for years.
3. Foreclosures Will Surge in 2010
A tsunami of Alt-A and Option ARM mortgages will reset in 2010. These two developments will lead to another surge in foreclosures.
4. House Prices Will Fall a Further 10% in 2010
5. Commercial Real Estate Foreclosures Will Reach Record Numbers in 2010
6. Retail Bankruptcies and Store Closings to Increase in 2010
7. Bank Failures Will Reach 500 in 2010
The bulk of these losses will be borne by regional banks. There were 150 bank failures in 2009. The FDIC just announced they would add 1,600 employees in 2010, doubling their work force.
8. The 2010 Deficit Will Increase to Almost $2 Trillion
The Federal Budget for 2010 anticipates a $1.5 trillion deficit. I believe the Obama administration will pull out all the stops to boost the economy before the 2010 elections. This means more spending.
9. Interest rates Will Rise in 2010
The bond market and foreign buyers will choke on this amount of debt. The result will be much higher interest rates. Ten year Treasuries will start the year at 3.8 percent. By year end, rates will exceed 5 percent.
10. The US Dollar Will Fall by 15% to Record Low in 2010
11. Gold Will Surge to $1500/oz. and Silver to $20/oz.
A falling dollar will result in a surge in gold and silver.
12. Oil Prices Will Exceed $100
As world demand increases and peak oil becomes acknowledged, oil prices will exceed $100 a barrel further depressing the U.S. economy.
13. A New ‘Jobs Program’ Stimulus Program Will be Implemented
Obama will announce another stimulus program and call it a “jobs program.” This will cost another $200 billion.
14. Democrats Will Have Huge Losses in the 2010 Congressional Elections
The Democrats will lose 50 seats in the House and 6 seats in the Senate.
15. The Stock Market Will Drop 30% in the First Half of 2010
After the Republicans regain power in Washington DC, the stock market will rally.
16. Isreal, Iran, Iraq, Afghanistan, Pakistan and India Tensions Will Escalate into Additional Hostilities
a) The uprisings in Iran are likely to provoke the current leadership to stir up more trouble in Afghanistan and Iraq.
b) The imposition of sanctions by the U.S. could also provoke Iran to lash out against Israel.
c) I expect Israel to attack Iran’s nuclear facilities before the end of 2010.
d) Iran’s response will be to disrupt the flow of oil through the Strait of Hormuz.
e) This will bring the U.S. Navy into conflict with Iran.
f) Oil prices will soar when this conflict breaks out.
g) The conflict in Afghanistan will worsen.
h) Tensions between Pakistan and India will increase as terrorists again attack within India.
17. Greece, Latvia and Hungary Will Default on Their Debts in 2010
Economically, Eastern Europe will crash with Greece, Latvia, and Hungary defaulting on their debt. This will plunge European banks into deeper losses and cause the next leg down in Europe. These foreign risks have the potential to spiral out of control.
[Now you know why] I’m not too optimistic about 2010. Let’s hope I’m wrong.
– The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
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