Best of the Week
Most Popular
1.The Greatest Stock Market Crash Of Your Life Is Just Ahead… – Warns Harry Dent - GoldCore
2.Budget 2016: Borrowing, Lifetime ISA, House Prices, Economy, Syria, Brexit and Stocks - Nadeem_Walayat
3.Gold Price Intermediate Top - Clive_Maund
4.Brussels Terror Attacks, Death of the European Union, BrExit Wake up Call - Nadeem_Walayat
5.Stock Market Maybe This Time is Different? - Tony_Caldaro
6.UK House Asking Prices Break Above £300k! Housing Market Paralysis - Nadeem_Walayat
7.A Big Reason Why Silver Price Is Set To Soar - Hubert_Moolman
8.The Financial Crisis Has Just Begun; Is The American Dream Is Over? - Chris_Vermeulen
9.Gold Stocks Spring Rally - Zeal_LLC
10.GLX, GLDX, Baby Gold Bull Market Stillborn? - Rambus_Chartology
Last 7 days
A Few Facts About Gold That Nay-Sayers Conveniently Ignore - 5th May 16
Save the Environment and Your Retirement: Sell Tesla - 4th May 16
Silver Bullion Has Key New Player – China Replaces JP Morgan - 4th May 16
Gold Stock Picks Up Over 400%, What's Next ? - 4th May 16
U.S. Treasury Secretary Jack Lew: Puerto Rico Needs Urgent Action - 4th May 16
Technical Trading Mastery for Traders & Investors - 4th May 16
Derivatives Crisis Of Banks…Worldwide - 3rd May 16
Bank of North Dakota Soars Despite Oil Bust: A Blueprint for California? - 3rd May 16
Stock Market Technical Analysis - 3rd May 16
Central Banks Need a Higher Gold Price : Hello GATA - 3rd May 16
A Currency War Battle That Europe and Japan Can’t Afford To Lose - 3rd May 16
When the Truth is Found to be Lies, Confidence in Currency Dies - 2nd May 16
How Brexit Could Help All of Europe - 2nd May 16
US House Prices Outpacing Official Inflation Rate, Household Income - 2nd May 16
USD Still Declining... - 2nd May 16
Gold & Silver Rally Huge as Central Bankers & Analysts Flub - 2nd May 16
Stock Market Bounce Day - 2nd May 16
Stock Market Uncertainty Following Two-Month Long Rally - Will It Continue? - 2nd May 16
Stock Market Correction Underway "Upside Objective Reached" - 2nd May 16
USD, Yen and an ‘Inflation Trade’ Update - 2nd May 16
Gold Commitments of Traders and More - 1st May 16
The Magic of Gold Ratio Charts - 1st May 16
Consensus Forming: China Heading Back Into Financial Crisis - 30th Apr 16
The Next Technical Price Targets for Gold & Silver - 30th Apr 16
Stock Market Downtrend Should be Underway - 30th Apr 16
Gold And Silver – A Clarion Alarm Call For All Paper Assets - 30th Apr 16
US Economic Statistics LIES, LIES AND OMG, MORE LIES - 30th Apr 16
Stock Market Strong Elliott Wave Relationship is Developing - 29th Apr 16
Fed's Kaplan: Brexit to Factor in US June Interest Rate Decision - 29th Apr 16
Silver Miners Strong in Grim Q4 - 29th Apr 16
Is Silver a better bet than Gold in the Near Future? - 29th Apr 16
How to Use the CoT Report in Gold Investing? - 29th Apr 16
Sri Lanka is Intriguing: Areas to Consider for Value Investing - 29th Apr 16
Gold “Chart of The Decade” – Maths Suggest $10,000 Per Ounce Says Rickards - 29th Apr 16
Are We or Are We Not in a New Gold Bull Market? - 29th Apr 16
Silver: The “Five Year Plan” and the Great Leap Forward - 28th Apr 16
Michael Hudson: The Wall Street Economy Has Taken Over The Economy and Is Draining It! - 28th Apr 16
AUD/USD - Trend Reversal or Just a Bigger Pullback? - 28th Apr 16
A Gold Revaluation Could Transform Your Financial Status - Overnight - 28th Apr 16
Monetary Policies Misunderstood - 28th Apr 16
Gold Bullion vs Gold Miners - 28th Apr 16
OECD Suggests BrExit Would Cut Net Migration by 1.2 Million by 2030 - 28th Apr 16
MP Naz Shah Punished for Tweets Made During Israel's Genocide of Gaza Palestinian People - 28th Apr 16
Global Recession in 2016 and Beyond - The Obvious Evidence - 27th Apr 16
Why Gold Bugs Need to Stop Listening to The Fear Mongers and Start Thinking for a Change - 27th Apr 16
BlackRock’s Fink: Fed to Raise Interest Rates by Quarter Point ‘at Best’ - 27th Apr 16
Gold More Productive Than Cash?! - 27th Apr 16
Donald Trump Will Fire Janet Yellen and Be Trapped - 27th Apr 16
Money Saving Gardening by Propagating Roses From Cuttings - Propagating Rose Plants Over 2.5 Years - 27th Apr 16
Facebook Censors Pro Trump and Negative Hillary News - 27th Apr 16
This is the Era of the Democrats and Your Taxes are Going Up - 27th Apr 16
Long Awaited Gold Price Breakout - 26th Apr 16
Crude Oil Price Double Top or Further Rally? - 26th Apr 16
Madness in the Crimex Gold and Silver Trading Pits - 26th Apr 16
Britain's Prospects: GBP and BREXIT - MAP Wave Analysis - 26th Apr 16
CRB, Gold, Oil, Cotton, Coffee - 7 Must See Commodities Charts - 26th Apr 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Catching a Falling Financial Knife

2010 Financial Markets and Economic Tipping Point Forecast

Stock-Markets / Great Depression II Jan 05, 2010 - 04:17 PM GMT

By: James_Quinn

Stock-Markets

Best Financial Markets Analysis ArticleFor the last week or two “experts” and pundits have been making their forecasts for 2010. I always take these forecasts with a grain of salt. The people making the forecasts generally have some skin in the game and will tailor their forecast to benefit their particular agenda or investment portfolio. I pride myself on dishing out punishment to both political parties and most investment shills. I will take on the thankless task of predicting the future. Below are my prognostications in the areas of the economy, domestic politics, global geopolitics, and the investment markets.


To date, the Federal Reserve has printed well over a trillion dollars in an attempt to evade a deflationary collapse, including a $700 billion bank bailout and a $787 billion stimulus package. And then there was $3 billion wasted on Cash for Clunkers ($24,000 per vehicle), $28 billion squandered on the $8,500 homebuyer tax credit, and an artificial suppressing of interest rates to 0 percent with $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? The fourth quarter of 2009 will show a positive GDP as government spending and Federal Reserve quantitative easing have continued at a rapid clip. As the government stimulus winds down in the first half of 2010, the true weakness of the economy will reveal itself. I expect a double dip recession commencing by June of 2010.

With the economy sinking back into recession, the official unemployment rate will exceed 11 percent by late 2010. The true non-government manipulated figure will approach the Great Depression levels of 25 percent. Over 8 million Americans have lost their jobs since 2007. The side effects from this fact will ripple through the country for years. One quarter of all homeowners in the U.S. is underwater in their mortgages.

A tsunami of Alt-A and Option ARM mortgages will reset in 2010. These two developments will lead to another surge in foreclosures. Despite government attempts to interfere in the market, home prices will fall another 10 percent in 2010. The continued weakness in employment and housing will lead to a further drop in retail sales.

Developers of malls, office buildings, hotels, condos and apartments will pay the piper in 2010. Billions in debt related to projects built in 2005 will need to be refinanced. These properties have dropped 30 percent to 40 percent in value. The continued weakness in retail sales will lead to retail bankruptcies and store closings. Less tenants means less rental income for mall owners. There will be a record number of commercial real estate bankruptcies 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. There will be 500 bank failures in 2010.

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. The 2010 deficit will be closer to $2 trillion. 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. As the world loses confidence in the American economy and leadership, the dollar will fall to new all-time lows falling by another 15 percent. A falling dollar will result in a surge in gold and silver. Gold will break $1,500 an ounce, with silver breaking $20 an ounce. As world demand increases and peak oil becomes acknowledged, oil prices will exceed $100 a barrel further depressing the U.S. economy.

Congress will pass the Obama healthcare plan by the end of January. The outrage will be palpable. Obama will then announce another stimulus program and call it a “jobs program.” This will cost another $200 billion. In February, the government will formally take over Fannie Mae and Freddie Mac. These unprecedented reckless interventions in our supposedly free markets will lead to huge Democratic losses in the 2010 Congressional elections. They will lose 50 seats in the House and 6 seats in the Senate. As the economy deteriorates the stock market will drop by 30 percent in the first half of 2010. After the Republicans regain power in Washington DC, the stock market will rally.

The biggest wildcards in 2010 will come from outside the U.S. The uprisings in Iran are likely to provoke the current leadership to stir up more trouble in Afghanistan and Iraq. The imposition of sanctions by the U.S. could also provoke Iran to lash out against Israel. This region is a powder keg with matches being lit every day. I expect Israel to attack Iran’s nuclear facilities before the end of 2010. Iran’s response will be to disrupt the flow of oil through the Strait of Hormuz. This will bring the U.S. Navy into conflict with Iran. Oil prices will soar when this conflict breaks out. The conflict in Afghanistan will worsen, with more American soldiers losing their lives. Tensions between Pakistan and India will increase as terrorists again attack within India.

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.
You may have noticed that I’m not too optimistic about 2010. Let’s hope I’m wrong.

Join me at www.TheBurningPlatform.com to discuss truth and the future of our country.

By James Quinn

quinnadvisors@comcast.net

James Quinn is a senior director of strategic planning for a major university. James has held financial positions with a retailer, homebuilder and university in his 22-year career. Those positions included treasurer, controller, and head of strategic planning. He is married with three boys and is writing these articles because he cares about their future. He earned a BS in accounting from Drexel University and an MBA from Villanova University. He is a certified public accountant and a certified cash manager.

These articles reflect the personal views of James Quinn. They do not necessarily represent the views of his employer, and are not sponsored or endorsed by his employer.

© 2009 Copyright James Quinn - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

James Quinn Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

molly doran
07 Jan 10, 22:07
doom and gloom

I read you 2010 prediction today and thought "Well written, scaery - but I wonder how his normal view of the world is?" So I looked at all the past titles of your articles. You must live a very sad life as you seem to be eternally pesimestic, gloomy and sour on the outcome of our world today and tomorrow. I have a hard time thinking you enjoy each day - as for years you writing has been so full of despair about all of us. I AM SO SORRY


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife