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If there's a proverb that captures the outlook for the U.S. economy in the New Year, it's the one that says: "It's always darkest before the dawn."
Regardless of any formal announcement of whether or not the United States drops into an actual recession, the ongoing credit crisis guarantees a contraction of the American economy by virtually every measure we know. That period of darkness will be marked by a dramatic slowdown in economic activity, as well as by rising unemployment, additional declines in U.S. stock prices, and constant volatility. And it could last as long as 12-18 months.
But when the dawn does come, it will be one to remember. If U.S. President-elect Barack Obama gets it right - and I have every reason to believe that he will - then investors will be presented with the greatest investment opportunity of our generation. At that point, shares of American companies will be at such low levels that wholesale buying by individuals, mutual funds, pension funds, institutional money managers, and foreign-controlled sovereign wealth funds, will generate gains that will not only make us whole, they will make us rich once again.
About the Author
Shah Gilani boasts a financial pedigree unlike any other. He ran his first hedge fund in 1982 from his seat on the floor of the Chicago Board of Options Exchange. When options on the Standard & Poor's 100 began trading on March 11, 1983, Shah worked in "the pit" as a market maker.
The work he did laid the foundation for what would later become the VIX - to this day one of the most widely used indicators worldwide. After leaving Chicago to run the futures and options division of the British banking giant Lloyd's TSB, Shah moved up to Roosevelt & Cross Inc., an old-line New York boutique firm. There he originated and ran a packaged fixed-income trading desk, and established that company's "listed" and OTC trading desks.
Shah founded a second hedge fund in 1999, which he ran until 2003.
Shah's vast network of contacts includes the biggest players on Wall Street and in international finance. These contacts give him the real story - when others only get what the investment banks want them to see.
Today, as editor of Hyperdrive Portfolio, Shah presents his legion of subscribers with massive profit opportunities that result from paradigm shifts in the way we work, play, and live.
Shah is a frequent guest on CNBC, Forbes, and MarketWatch, and you can catch him every week on Fox Business's Varney & Co.
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[…] U.S. Economic Outlook for 2009 […]
Great outlook and some sobering predictions. Consumers have to buckle up for a wild ride in 2009.
[…] Shah Gilani Money Morning addthis_pub = 'jutiagroup'; addthis_logo = 'http://www.jutiagroup.com/favicon.ico'; addthis_brand […]
Where is the money going to come from to push up the markets – do you think the 1 or 2% mutual funds have in cash will push the market – or the family that has already lost 5-600,000 has the money – you paint a rosey picture but does it matter how cheap something is if you have no money to buy it.
I think good quality banks are a bargin and if I had any money to invest thats where it would .,ie BB&T no body has mensioned what they are donig to save as many people considering forclousere and the program they all ready have in the works cost them seven million dollars to get it up and running and guess what it is working. Than there is Prudential, Wells Fargo and a local bank Independent, all still paying dividients.
[…] Those numbers are worse than Goldman originally predicted, and create an outlook similar to Money Morning’sprojections, which called for a credit-crisis-nurtured economic downturn that could last as long as 12-18 months. […]
[…] Those numbers are worse than Goldman originally predicted, and create an outlook similar to Money Morning’sprojections, which called for a credit-crisis-nurtured economic downturn that could last as long as 12-18 months. […]
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[…] Those numbers are worse than Goldman originally forecast, and create an outlook similar to Money Morning’s projections, which called for a credit-crisis-nurtured economic downturn that could last as long as 12-18 months. […]
When men say there is recession, we will say there is possession. The time of economic recession is a time of wealth transfer. The greed of men is the reason behind the economic down turn of America. The treasure of the whole world locked up in a treasury; now the treasure box is broken and the cargoes are threw inside the raging storm of economic crunch. The blind at the wall street could not see until calamity befall the world economy. Its a mess that will take years to clear. Its beyond the power of financial experts that wererecruited from nooks and crannies of this world.
This is a tempest sent to wreck the whole world; Yet, its a time of wealth transfer!
[…] Money Morning: U.S. Economic Outlook for 2009 […]
We are losing the Economic War!
It does not matter how we reverse the balance of trade as long as we stop the flow of gold, dollars, T-bills, Government Bonds, title to US located property, and other US assets from The USA to other countries, in payment for the things that they make for us to consume, and for additional quantities of their US dollars to pay for our government expenses.
A Trade Deficit is created when the USA importing, transportation, distributing and retail sales companies such as WalMart, Home Depot, NTB and etc. pay companies and individuals in foreign countries like China with US dollars to manufacture the things that these US businesses import, distribute, and then sell to the US consumers. Manufacturers such as GM, Ford, GE, Chrysler, GE, Westinghouse and etc. manufacture vehicles, appliances, and equipment made with imported parts that they paid the companies in the foreign countries with US currency to manufacture these parts for assembly of the finished product in the USA that is then sold to US consumers.
The US government also "borrows" US dollars (actually they sell freshly printed-paper T-Bills, US Government Bonds, and other US securities at public auction to China, private individuals, and other industrialized countries that earn US dollars mostly by manufacturing things for international trade) to pay US government expenses including negative balance of trade, wars, military jets with active duty military USAF pilots for the personal use of specially privileged members of congress (Pelosi), employee payrolls, government retirement checks, courts, federal police, failed business bailouts, cash bonuses to the various Wall Street forgers of SEC documents that contributed to political campaigns, Las Vegas corporation junkets for failed corporation employees, house mortgages for big spenders with bad credit, new multi-million dollar French manufactured personal corporate jets for political contributor's bankrupt corporations, pork barrel projects, research contracts, welfare, social security, Medicare, Medicaid, SSI, expensive corporate vacations, new infrastructure, wealth re-distribution, mental health, imported consumer goods and etc., and any other thing that congress and the president decides to use taxpayer money to acquire, build or just give to their political contributors and various other privileged individuals with borrowed US dollars. If taxes taken in each year are not sufficient to pay these expenses, then the government just prints more paper T-Bills, Government Bonds, etc. and borrows US dollars from people who are holding US dollars (foreign manufacturers) in exchange for these freshly printed T-Bills, Government Bonds, etc.