Best of the Week
Most Popular
1.Gold Price Crash Through Key Support, Crude Oil in Freefall - Clive_Maund
2.Marc Faber Warns Japan's Bond-Buying Program is a Ponzi Scheme - Bloomberg
3.Silver Price and Powerful Forces - DeviantInvestor
4.Stocks Bear Market Catastrophe as Stocks Flash Crash to New All Time Highs - Nadeem_Walayat
5.Marc Faber Warns Not to Hold Any Gold in the U.S. - GoldCore
6.U.S. Housing Market San Francisco at Critical Mass - Harry_Dent
7.Global Scramble For Silver - Coins “Hard To Get,” “Premiums Likely To Jump” - GoldCore
8.Major World Stock Market Indices Analysis: SPY, QQQ, DAX, FTSE, CAC, HSI - Michael_Noonan
9.Japan's kaput?! - Axel_Merk
10.Tesco Empire Strikes Back, £5 off £40 Discount Voucher Spend Explained, Exclusions Warning! - Nadeem_Walayat
Last 5 days
Crude Oil and Stock Market Setting The Stage For The Next Recession - 23rd Nov 14
This Publicly-Owned Bank Is Outperforming Wall Street - 23rd Nov 14
Who’s Ready For $30 Crude Oil Price? - 23rd Nov 14
Strategic, Methodological and Developmental Importance of Knowledge Consumption - 23rd Nov 14
Manipulated Stock Market Short Squeezes to Another All Time High - The China Syndrome - 23rd Nov 14
Gold Price 2015 - 22nd Nov 14
Stock Market Medium Term Top? - 22nd Nov 14
Is the Gold And Silver Golden Rule Broken? - 22nd Nov 14
Malaysia's Subsidy and Budget Deficit Conundrum - 22nd Nov 14
Investors Hated Gold at Precisely the Wrong Time: What About Now? - 22nd Nov 14
Gold and GLD ETF Selloff - 22nd Nov 14
Currency Wars, the Ruble and Keynes - 21st Nov 14
Stock Market Investor Sentiment in The Balance - 21st Nov 14
Two Biotech Stocks Set to Double on One Powerful Catalyst - 21st Nov 14
Swiss Gold Poll Likely Tighter Than Polls Suggest - 21st Nov 14
Gold's Volatility and Other Things to Watch - 21st Nov 14
Australia Stock Market and AUD Dollar Analysis (ASX200 and AUDUSD) - 21st Nov 14
New Algae Research May Have Uncovered an “Energy Forest” Under the Sea - 21st Nov 14
The Cultural and Political Consequences of Fiat Money - 20th Nov 14
United States Social Crisis - No One Told You When to Run, You Missed the Starting Gun! - 20th Nov 14
Euro-Zone Tooth Fairy Economics, Spain Needs to leave the Euro - 20th Nov 14
Ebola Threat Remains a Risk - New Deaths in Nebraska and New York - 20th Nov 14
Stock Market and the Jaws of Life or Death? - 20th Nov 14
Putin’s World: Why Russia’s Showdown with the West Will Worsen - 20th Nov 14
Making Money While The World Burns - 20th Nov 14
Why This "Quiet Zone" Is Now Tech Stocks Biggest Profit Sector - 20th Nov 14
My Favorite Stock McDonalds Just Got Kicked Off My “Buy” List - 19th Nov 14
European Economies in Perpetual State of Shock, What's Scarier Than Deflation? - 19th Nov 14
Breakfast with a Lord of War and Nuclear Weapons - 19th Nov 14
The U.S. Economy’s Ebb and Flow - 19th Nov 14
What You Need to Know Before Investing in Alibaba - 19th Nov 14
Forget About Crude Oil Price Testing 2009 Low - 19th Nov 14
What Blows Up First? Part 5: Shale Oil Junk Bonds - 19th Nov 14
Bitcoin Price Did We Just See an Important Slump? - 18th Nov 14
How to Profit From Oversold Crude Oil Price - 18th Nov 14
Stock Valuations Outrunning Profits Growth - And the Band Played On - 18th Nov 14
ECB Buy Gold Bullion? Japan's Monetary Policy Dubbed "Ponzi Scheme" - 18th Nov 14
Gold, Silver, Crude and S&P Ending Wedge Patterns - 18th Nov 14
How High Could USD/JPY Go? - 18th Nov 14
On Obama and the Nature of Failed Presidencies - 18th Nov 14
Globalism Free Trade Immigration Connection - 18th Nov 14
An Epiphany From Hell - Buy Gold and Silver - 18th Nov 14
Too Difficult to Get a U.S. Home Loan - 18th Nov 14
Has the Gold Bear Trap Been Set - 18th Nov 14

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Gold Report 2015

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

© 2005-2014 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

Free Report - Financial Markets 2014