We would like to take this opportunity to wish you a very happy, healthy, prosperous New Year.

OUR OUTLOOK FOR 2009

A) The U.S. dollar will decline in 2009.  This is a lynchpin for several investments.

B) Precious metals and grain commodities have bottomed.  These are priced in dollars…as the dollar declines their prices will rise. 

The above predictions are strongly held views.  The next prediction depends upon events that are still unfolding, therefore we are waiting to establish the timing for this prediction.

C) Many stock markets will bottom in 2009, due to the fact that they have become very cheap.  We will watch them and gauge their attractiveness based upon a number of fundamental and technical variables.  We believe that when the bottoms do occur, they will be followed by rallies, which will carry many markets much higher.  We do not believe that the time has arrived for most markets, but some markets may soon be ready for purchase.  We plan to keep our readers updated on our views about the proper time to buy.Click here to read full article...

I AM WRITING THIS ON THE NORTHERN HEMISPHERE’S SHORTEST DAY OF THE YEAR

Personally, I am a lover of daylight, so I am hoping for more and more light as the solstice passes and days begin to lengthen.  Let us also hope for some enlightened behavior by banking functionaries and banking system users in coming months.  Our friends in the southern hemisphere are reaching mid summer, may you enjoy these pleasant times full of daylight.Click here to read full article...

How did we and many others resist the attraction of a seeming sure thing in the Madoff Ponzi scheme?  Many noticed that Madoff’s proposal had a few red flags.  They were:Click here to read full article...

THE ECONOMIC NEWS IS BAD, BUT MARKETS ARE RALLYING IN SPITE OF THE NEWS

This letter discusses a number of problems facing the world economy.  At the present time, the global economic background is bleak.  However, the short-term market outlook in many countries is not nearly so bleak.  We believe that many of the world’s markets are currently in rally mode.  After experiencing large declines for months, we expect the prices of shares in many countries, gold, foods, and foreign currencies to continue to rally for the next few weeks.Click here to read full article...

The Sunday, November 30th Los Angeles Times’ front page headline boldly reads “BAILOUT: PAY NOW, WORRY LATER”

Those five words say it all.  As we have expected for years, the crisis has developed.  As we have assured readers for years, no major bank will be allowed to fail.  Instead, after $8.5 Trillion in commitments by the U.S. and other governments, we now find ourselves about one third of the way through the crisis.  We anticipate that the final bill worldwide will be between $20 and $40 trillion.  Wow!Click here to read full article...

WE ARE QUITE CERTAIN THAT IN THE UNITED STATES, BANK AFTER BANK WLL BE RESCUED AS CITIBANK WAS THIS WEEKEND 

WHO WILL BE NEXT...BANK OF AMERICA, JP MORGAN, GOLDMAN SACHS, MORGAN STANLEY?Click here to read full article...

THINGS CHANGE FAST

A few weeks ago many thought I was out of my mind.  I had the temerity to state that I thought that we were going into a depression, not a recession, and that the economic decline would last for two to three years.  Now, it looks like a few others are coming around to my view.  The chairman of Goldman Sachs recently said we are facing a banking crisis worse than the Great Depression.  The former chairman of the New York Stock Exchange said it is comparable to the Great Depression.

More and more are willing to admit the magnitude of the problem.  We continue to see a few Pollyanna types who want to see everything as sunny.  For them, we have the following outlook.  In our opinion, things will get sunny and big buying opportunities will periodically develop, but they will be interspersed with big declines, and a lot of hand wringing.Click here to read full article...

HOWEVER, THE STOCK, COMMODITY, AND CURRENCY MARKETS ARE DIFFERENT FROM THE ECONOMY.
 
The stock market discounts future economic events.  Right now it is discounting economic decline that will not take place for months.  Financial stocks have been declining for over 16months, and the U.S. market as a whole for 13months. Yet, if you believe the Government’s economic statistics, the economy was growing through June. Click here to read full article...

U.S. ECONOMIC NUMBERS SHOW DECLINE OF 0.3% GDP IN Q3 2008

The facts probably indicate that the recession/depression actually began in the fourth quarter of 2007 or early in 2008.  Since that time, we expect that real GDP has shrunk by about 4% from its peak.   Before the current economic correction is over, we expect to see peak to trough economic growth shrink by at least 10%...and the economic shrinkage will last from late 2007 through 2009.

 The facts as we see them:Click here to read full article...

ANNA SCHWARTZ SPEAKS ON WHY INFLATION WILL RETURN

Anna Schwartz is 92 years old and is one of the world’s most respected economists.  She co-authored with Milton Friedman the brilliant work A Monetary History of the United States, and has worked with the National Bureau of Economic Research for 67 years.  She retains her emeritus professorship at the Graduate Center of the City University of New YorkClick here to read full article...