Martin Weiss’ team of international experts – Mike Larson in North America, Claus Vogt in Europe, Tony Sagami on Asia, Rudy Martin on South America – and Ron Rowland, one of the nation’s foremost experts on international exchange-traded funds (ETFs), met recently to discuss and determine what they think is coming next. They came up with eight new forecasts for 2010 — some very negative, some very positive – and put forth specific, actionable recommendations based on their conclusions. Words: 1969

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com, presents below reformatted and edited [..] excerpts from an article* by Martin Weiss (www.uncommonwisdomdaily.com) for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article reposting to avoid copyright infringement.) The article goes on to say:

1. The Obama administration and Congress will be paralyzed and unable to pass another big stimulus package and unable to prevent a double-dip recession!
Just in the past few weeks, we’ve seen an outpouring of bad data and news on the economy — GDP slowing sharply, a key manufacturing index hitting a seven month low, home sales running at the lowest level in nearly a half-century, bank lending falling – and horrendous jobs reports.

Voices are clamoring for another stimulus package but… Congress is paralyzed… and the President does not have the political – or financial – capital to make it happen. The Congressional Budget Office has estimated that the U.S. budget will produce a deficit of $1.5 trillion this year and $1.3 trillion in 2011, already far worse than they thought just a year ago… and now they’re going to get far lower income tax revenues… and far bigger bills for unemployment checks than they’ve been expecting. Even if the economy just slows down moderately, the deficit could explode well past $2 trillion in 2011 and it’s the exploding deficit that’s bringing massive political resistance to more stimulus on both sides of the aisle.

2. The entire burden of fighting recession and financing deficits will fall on central banks and, as such, Bernanke and his counterparts in Europe will launch a second, even bigger round of money printing!
These [new] paper dollars will not create real prosperity in the United States or Europe… and, [unfortunately,] a substantial portion of that money [will] wind up flowing to other countries where there is true, fundamental growth.

3. The sovereign debt crisis will soon return with a vengeance — first in Eastern Europe, then in the U.S. and the U.K.!
The sovereign debt crisis is not over by a long shot… even though the IMF and the EU [primarily Germany] bailed out Greece, Portugal, Spain and all the other PIIGS countries. Everyone seems to forget that the PIIGS countries are not the only ones in trouble. According to one of the world’s most respected institutions, the Bank of International Settlements (BIS), the sovereign debts of the United States (90% of GDP) are worse than the sovereign debts of PIIGS countries like Ireland (83%) and Spain (73%). Furthermore, the BIS says that, if the U.S. government allows current trends to continue, then …

4. The government debt burden in the United States will soon be worse than the debt burden in Greece!
Ultimately, the debt burden in the U.S. will reach 400% of GDP, more than triple the debt burden of Greece today… [This will result in] more recession in Europe and the U.S., more money printing to offset the shocks, more declines in the euro and the U.S. dollar … and at best, more false prosperity.

5. Growth in China will continue to be at least four times greater than that of the U.S. and Western Europe!
As mentioned above, a substantial portion of that money [will] wind up flowing to other countries where there is true, fundamental growth – and where the growth is based on real demand – and that’s China and the rest of Asia. Let’s compare the performance of the U.S. versus China:
a) the U.S. economy contracted by 2.4% last year despite all the bailouts while China’s economy GREW by 9.1%
b) the U.S. is growing at an annual rate of about 2.5% while China is expected to grow 10.5%
c) retail sales in China soared 18%, six times better than in the U.S.
d) China’s exports in June surged 44% compared to last year while U.S. exports increased by a measly 2%
e) China now consumes more energy than the U.S. and General Motors now sells more cars in China than it sells in the U.S.

[Furthermore,] were you to add up all of America’s gold in Fort Knox and other vaults, plus all the foreign currency reserves and drawing rights at the U.S. Treasury, you would get a grand total of $490 billion… but against that we have debts to foreigners of $2.1 trillion and if you subtract America’s foreign debts from America’s cash, you’ll see that the U.S. is under water to the tune of $1.6 trillion. Meanwhile, China has total gold and reserves of $5 trillion, minus only $374 billion in foreign liabilities. So it’s in the black to the tune of $4.6 trillion! The bottom line: China sits on the biggest mountain of cash in the entire world, while the United States is down in the deepest valley of debt in the entire world!

China is not alone, however. Consider Singapore, for example, whose GDP has expanded year-to-date at an annual rate of 19.3% and that’s eight times faster than the GDP growth in the United States. Then there’s Indonesia…

6. Over the next 12 months, investors in Indonesia will make even more money than investors in China!
Indonesia has growing like a weed and now it’s growing even faster. Its stock market is up 20% so far this year. Its currency has surged 5% – and it’s just warming up. There is a massive shift in capital and wealth from the West to the East… and Indonesia is getting a supersized share of that wealth. Foreign investment in Indonesia has surged 51% compared to last year. This is a megatrend of far-reaching consequences.

7. While Asia outperforms the U.S. and Europe, Brazil and Chile will outperform most of Asia!
The big growth spurt in China and Asia was the first wave. Now, the big growth spurt in countries like Brazil and Chile is the second wave. If you’re looking for the next China, the next massive growth spurt that will carry forward for many years, you should go to South America. South America exports to China and Asia, and that was the starter engine for growth in South America but now South America’s growth engines are powered by domestic demand.
a) Brazil
Just a few years ago, over half of Brazil’s people were at the margins of society, outside the cash economy. Now, those same people open bank accounts. They use credit cards. They pay taxes. Just a few years ago, Brazil was importing energy. Now it’s entirely self-sufficient in energy and awash in new oil discoveries.
b) Chile
Chile has come so far so fast it’s now classified as a developed economy. Chile produces more copper than any other nation in the world — five times more than the United States. While U.S. consumers are strapped for cash and cutting back, Chile’s are cash rich and spending more. While U.S. banks are struggling, Chile’s banks just enjoyed a 57% jump in profits in the first half… Plus here’s the biggie: unlike the U.S., Brazil and Chile have virtually no foreign debts.

The big picture is very clear — bad news in the U.S. and Europe, good news in Asia and South America. Now let’s get down to the heart of the matter — how investors can make money.

8. Some of the greatest fortunes in the world will be made in international ETFs
Right now, there are 86 single-country ETFs — one or more for each of the major countries in the global markets today. You can pick almost any country with a viable stock market… click your mouse or call your broker to buy an ETF for that country… and you’ll instantly have a nice, liquid, diversified basket of that country’s leading companies. [In addition,]there are 103 other indexes in other countries that have all outperformed the best performing index in the U.S. For example, since the March lows of last year, the Chile ETF is up 104%, Australia’s +105%, one of the leading China ETFs is up 111%, Brazil is up 114%, Singapore +127%, South Korea +130%, Thailand +143%, and India +158%.

On a 2009 calendar year basis, if you had bought the ETF that tracks the Dow Jones Industrials at the beginning of the year and sold it at the close of last year, you’d have a gain of 22.8%, including dividends. On a comparative basis, however, the Singapore and Australia ETF were both up 68%, South Korea was +71%, Thailand was +81%, Chile was +86%, India +102% and Brazil +121%.

Year-to-date the Dow Index is up a meager 2.2% while the Dow ETF which includes dividends is up about 3.7%. A couple of foreign markets, like Brazil and Australia, are down a tad but many foreign markets are, again, greatly outperforming the Dow ETF. South Korea and India are up 2 times more than the Dow and Chile, which we talked about earlier, is beating the Dow by 5.5 to one this year.

The above results are kind of short-term oriented, just 2009 and 2010… but if you want to invest with core, long-term money, go all the way back to the beginning of 2003 and consider how much you could have made. In Singapore, you could have made 274%, South Korea +194%, Mexico +363% and, again, in Brazil +972%! That was eighteen times better than the Dow.

If you’re not confident in just a single country, there are 90 international ETFs that focus on broader regions — the Pacific Basin, East Asia minus Japan, Southeast Asia, Latin America, and many more. All told, including all the different ones mentioned previously, there are at least 225 international ETFs available to U.S. investors — all regulated by the U.S. authorities, all listed on major U.S. exchanges.

The aforementioned is all for up markets. In down markets… buy inverse ETFs. With inverse ETFs, the more the market falls, the more money you can make. It is easy to buy inverse ETFs and they number exactly 100! One hundred ETFs that are designed and built, from the ground up, for declining markets. You never have to go short. You never buy options. You never open a margin account or borrow money. You just buy low and you sell high — exactly like you would with any stock, in a regular stock brokerage account, online or offline. That’s it.

[An excellent] long-term strategy… is to use strength in the West to reduce your exposure and use weakness in the East to increase your stake, i.e. wait for rallies in the U.S. markets to sell and wait for declines or corrections in Asia (and South America) to buy…[and when that occurs] buy Market Vectors Indonesia (symbol IDX)… and iShares MSCI Chile (symbol ECH).

Knowledge alone is not enough, however, because the only people who make money are the ones who also have the courage to transform their knowledge into action. Same for investors. Until you act on what you know, those kinds of profits will continue to be out of your reach.

*http://www.uncommonwisdomdaily.com/8-bold-new-forecasts-for-2010-9964?FIELD9=3 (Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. To view archives or subscribe, visit their web site.)

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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.

*http://seekingalpha.com/article/181126-2010-economic-outlook-the-tipping-point

Editor’s Note:
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Japan experienced in the late 80′s what the world experienced in the lead up to the recent ‘global financial crisis’ – a huge property and stock market bubble. In the interim their government has done everything possible to get back to where they had come from yet more than two decades into its economic nightmare, Japan is still fighting hard to keep its economy from a complete and utter collapse. Words: 861

In further edited excerpts from the original article* at www.thedailybell.com, Frank Suess goes on to say:

Japan’s ‘Weak DecadeS’
With the U.S. stock markets experiencing weak performance over the past decade, filled with weak monetary policies, weak fiscal policies, weak geo-political progress and weak leadership the 2000′s could best be described as our “Weak Decade” andl ooking back we can’t avoid being reminded of Japan’s earlier two decades of weakness. Today, at [less than 11,000], the Nikkei 225 stands pretty much at the same (nominal) level as it did around 1987 and it´s a lot lower than it was at the end of its great bull market in 1989. On December 29, 1989, the Nikkei peaked at 38,876. In other words, the price level of the Nikkei today stands at roughly a quarter of what it was 20 years ago!

Is This Deja Vu?
It´s an ongoing debate whether global economies and financial markets have entered a similar path as did Japan more than twenty years ago:

1. Japan experienced repeated and substantial rallies on the way down. If indeed we should consider the Japanese story line a blueprint for the decade ahead, then the current market has potential for more upside in the current bear market rally before it goes a LOT lower.

2. Patience is big factor in these kinds of markets. Bear markets can take a long time. Similar to the Great Depression, when the Dow took approximately 23-and-a-half years to regain the nominal level it first reached on September 1, 1929, the Nikkei is taking a very long time to regain its health. Despite all the monetary inflation around the globe and certainly in Japan, hardly anyone would at this point expect the Japanese market to regain its 1989 highs anytime soon.

3. Similar to the US, the Japanese stock market boom was accompanied by a property boom of immense proportions.

In summation, Japan experienced in the late 80′s what the world experienced in the lead up to the recent ‘global financial crisis’ – a huge property and stock market bubble. In Japan, the collapse came in early 1990 and the nation’s economy has not recovered since.

The Japanese ‘Remedy’ Has Failed
As mentioned in the introduction, the Japanese did everything possible to get back to where they had come from but today, after twenty-some years of unprecendented ‘deflation fighting’, Japan remains mired in deflation, with unemployment on the rise once again and the economic ‘recovery’ once again losing steam. The Hatoyama government is increasing the deficits and growing the country’s debt even further. At this point, there appears to be no other way to keep Japan from tipping over completely.

Comparing Our ‘Weak Decade’ with Japan’s ‘Weak DecadeS’
Yes, there are differences between the lost decades of Japan and our Weak Decade.
1. the Japanese people continued to save throughout the crisis and largely stayed away from living beyond their means
2. the Japanese economy did continue to produce real goods and to export.
3. Japan relied on the Yen ‘carry trade’. However, since 2007, the problem has been that as the rest of the world (notably the US) quickly erased the ‘advantage’ Japan’s ultra-low interest rates gave it, the Yen has been going up (+27% against the US dollar) which has destroyed Japanese exports and rendered huge damage to the Japanese economy.

The Cost of Economic Growth Getting More Expensive
Economic growth is getting VERY expensive! So far, lower interest rates have been a trend largely produced artificially by governments and central banks. However, we have reached rock-bottom and the fact is that governments and central banks can only manipulate the price of money to a certain degree. Once short-term interest rates start rising – yields for long-term bonds are on the rise already – financing the boom will become increasingly difficult.

Every time government fights the economic downturn with fresh and huge amounts of taxpayer money, a true recovery is postponed and the artificial daydream of economic growth, financed on the back of coming generations, becomes yet a little more expensive.

The Japanese monetary and fiscal anti-deflation reflex in reaction to the crash in the 90´s was very much the same as the recent and currently ongoing global pumping approach. Japan has been running exactly the same “stimulus” as the rest of the world is now employing to fight the downturn. It didn´t work in Japan and I doubt it will work globally.

If ever there was an economic illustration of the fact that “stimulus” cannot revive a REAL economy, Japan is that illustration.

*http://www.thedailybell.com/739/Frank-Suess-2010-And-Beyond-Deflation-Japanese-Style.html (Frank Suess, chairman and chief executive officer of BFI Consulting Inc., a Zurich, Switzerland wealth management and consulting company.)

Editor’s Note:
- 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.
- Permission to reprint in whole or in part is gladly granted, provided full credit is given.
- Sign up to receive every article posted via Twitter, Facebook, RSS feed or our Weekly Newsletter.
- Submit a comment. Share your views on the subject with all our readers.
- Buy the book below from Amazon. It’s pertinent to this article and inexpensive too.