US recession

From Tom Petruno's Money & Company blog in the LA Times:

Organized labor might have hoped that the heavy job losses in this deep recession would boost Americans' trust in unions as a counter-balancing force. Instead, just the opposite has happened.

Stock market investment - Two years ago, I talked to a Canadian bank and they swore to me that the subprime crisis which was surfacing in the U.S. at the time wouldn’t touch them. The bank’s shares have since fallen 40 percent. You can run but you can’t hide.

This is no ordinary downturn. After the biggest credit bubble in history, we face a correction on an unimaginable scale. Make no mistake about it: This is a credit-cycle bust that the government cannot stop. The losses are already catastrophic. And the massive unwinding is nowhere near finished yet…

Rick Pendergraft says you shouldn’t underestimate the lift that tumbling gas prices can give consumers in 2009. Compared to the $4 a gallon peak in July, drivers will save $162 billion a year at today’s prices. Add that to a boost in confidence from the Presidential changeover, and Rick says a slow recovery could be on the horizon.

Every solution has a cost, says Bill Bonner. And trying to solve this credit crisis could cost the government over $2 trillion a year. That why when the Fed says is it “going for broke” to avoid all-out financial collapse, it really means it.

Gold bugs have suffered one of their worst years in history, says Keith Fitz-Gerald. But the US dollar looks increasingly fragile beyond this period of short-term panic buying. And that means the outlook for gold remains strong. Keith says every investor should ensure gold forms part of their investment strategy for 2009.

Following an historic election, we take a moment to examine just what an Obama presidency will mean to the United States - what we have to look forward to, and how he will deal with our current financial crisis. And according Jim Davidson, some of the numbers just don’t add up.

Keith Fitz-Gerald says the recession that is now inevitable in the US and Eurozone will not necessarily evolve into a worldwide contraction. US influence in the global economy is waning, while China’s is growing rapidly. Keith says countries with high cash reserves and low external debt should bounce back strongest in the long term.

Over in the UK, where the economy is already shrinking, Ben Traynor looks ahead to the world after this downturn. He sees three major changes to the future global economy: 1) A larger role for governments. 2) Less efficient capital allocation. 3) More protectionism, especially in the US, with disastrous consequences for the dollar.

Investors need a solid defense right now, says Martin Denholm. This means holding high-dividend stocks. Consumer staples and telecoms industries are the best places to cherry pick strong companies. For a lower-risk alternative, try these two high-dividend ETFs (AMEX:SDY, PEY).

Alexander Green recommends using trailing stops to limit downside risk on these 13 cash-rich companies.

Recession is on the way, but don’t join the stampede out of the market. There are still ways to beat the bear. Martin Denholm has a simple five-point investment plan to profit in this downturn. 1) Go short. 2) Buy put options. 3) Sell call options. 4) Use bearish mutual Funds. 5) Buy reverse ETFs on vulnerable sectors.

Today, the Dow dropped below 8,000 for the first time since March 2003. This is great news for investors, says J. Cristoph Amberger. “History has proven time and time again that the seeds of wealth are sown during market crises… by buying good companies at crash valuations.”

It is in exactly times like these that Washingtion likes to pass under-the-radar legislation. Dave Gonigam says some ideas floated at a Congressional hearing on 401(k) and pension plans should sound alarm bells among investors. This form The Daily Reckoning’s Desidooru Saloon blog…