September 2011 - Forecasts & Trends

Forecasts & Trends is much more than just investment blog posts. You need to know the "big picture;" you need to have a "world view," especially in the post-911 world; and you need more information than ever before to be successful in meeting your financial goals. Gary intends to help you do just that.

Forecasts & Trends

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  • The Latest (Secret) Rescue Plan For Europe

    Over this past weekend, the International Monetary Fund (IMF) and G-20 leaders met in Washington, and the main focus was the deepening financial crisis in Europe. Leaders from around the world called on the stronger nations of Europe to “leverage” their emergency bailout fund, the European Financial Stability Facility (EFSF), by up to trillions of euros if necessary.

    While none of the G-20 leaders will confirm what follows, it is widely believed that a new three-part plan was introduced at the weekend meeting to address the growing debt crisis in the eurozone: 1) increase the EFSF to at least €2 trillion; 2) recapitalize eurozone banks by at least €150 billion; and 3) allow Greece to default on 50% of its debt.

    Since July 19, I have maintained that the European debt crisis would dominate financial markets around the world. Since then, we’ve seen the Dow and the S&P 500 plunge by nearly 20% at the low point. However, the global equity markets rallied strongly on Monday and again today on hopes that the new bailout plan hatched over the weekend will stem the crisis in Europe.

    It is interesting that Europe is preparing to go down a similar path as the US took in 2008 – huge bailouts and a possible Euro-TARP to restructure its ailing banks. The hand of Tim Geithner is all over this one. I hope it turns out better for Europe, but I am not optimistic.

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  • Fed Offers Bailout of European Banks

    Last Thursday we learned that the US Federal Reserve has decided to make unlimited US dollar loans (swaps) to the European Central Bank (ECB) and directly to European money center banks that are in trouble, at least through the end of this year. And what will the Fed get in return as collateral? Eurodollars that are quickly falling in value as of late. So even as our own economy may be falling back into recession, the Fed sees fit to bail out the European banks that are sinking in sovereign debt from the likes of Greece, Ireland and Portugal.

    All eyes are on tomorrow's Fed Open Market Committee policy statement. The Fed is expected to announce its so-called "Operation Twist" strategy that is intended to lower medium and long-term interest rates, which may or may not work. Some people expect the Fed to comment on its latest decision to make unlimited US dollar loans to European banks, but I will be very surprised if they mention a word about it. They're keeping it very quiet (which is another good reason to read my E-Letters and blog postings).

    Speaking of blog postings, I will write about tomorrow's Fed policy decision on my blog before the end of the day tomorrow. Go to www.GaryDHalbert.com and subscribe to read my take on the Fed's announcement.

    Following the Fed discussion, I will bring you the highlights of the latest report on US poverty from the Census Bureau. Poverty is now at an all-time high. Ditto for the number of Americans that depend on food stamps, according to the Department of Agriculture. These two reports are very troubling.

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  • Obama’s Jobs Speech, The Economy & The Fed

    Once again this week, there is a lot of news to cover. We begin with my thoughts on President Obama’s latest “jobs” speech in which he asked for yet another almost $450 billion in stimulus which he said is “paid for.” That all depends on Congress passing a litany of new tax increases that Obama announced yesterday. This guy just never learns! Obama’s latest jobs plan is just a part of a carefully crafted political re-election strategy that he can use regardless of whether or not Congress passes his American Jobs Act.

    Following that discussion, we will look at the latest economic reports, including the dreadful August unemployment report. Next, we will move on to the latest news from the Fed and what the FOMC may be up to at its upcoming monetary policy meeting on September 20-21.

    Most importantly, I will also announce today that I have started a BLOG. At the end of this E-Letter, I will give you more details. Many people have encouraged me to start a blog, but until now I have resisted. I have recently changed my mind, and you can access my new blog at www.garydhalbert.com. I will be covering a lot of different topics and I trust you will like what you see. If so, I hope you will subscribe and join in the discussions and let me know.

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  • European Debt Crisis Revisited - Implications For the US

    Today we take a fresh look at the European debt crisis which is worsening. Just over a month ago, EU leaders agreed on a second bailout loan for Greece to keep it from defaulting. That bailout loan had to be approved by all EU member nations, and several have refused to do so unless Greece can put up collateral. This has caused the bailout agreement to unravel and Germany's Chancellor Andrea Merkel is frantically trying to put it back together. If she fails, we could get another serious shock to the equity markets in the US.

    Meanwhile, the European Central Bank began buying huge chunks of government bonds from Italy and Spain to keep their credit markets functioning. Some argue that the ECB is not authorized to make such purchases but it is doing so anyway. It remains to be seen just how long the ECB can continue this large-scale quantitative easing. In any event, the European debt crisis is worsening, and I continue to believe that it will have more negative consequences for our markets here.

    A new CNN poll found that Americans' confidence in Congress is at a new low. For the first time ever, a majority of Americans want the bums in Washington voted out of office -- including their own Representatives in Congress. In past polls a majority wanted some members of Congress kicked out, but not their own Representatives. You'll find this story very interesting. Finally, I leave you today with a very good article written by Tony Blankley who offers President Obama some advice for his major speech on Thursday night.

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