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Due to the holidays, I have chosen to include a couple of articles I found quite interesting for your reading pleasure today. The first article is from yesterday's The Weekly Standard, which analyzes the outlook for 2012 from two different perspectives, based on the various assumptions one can use. I think you will enjoy it.

The second article below comes from Barry Ritholtz, the author of the popular book “Bailout Nation.” Barry pokes some fun at the many New Year forecasts we all hear this time of year, and he points out that most of them prove to be wrong. I'll be back to my usual chorus of topics and titles starting next week.

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Last Thursday we learned that the US Federal Reserve has decided to make unlimited US dollar loans (swaps) to the European Central Bank (ECB) and directly to European money center banks that are in trouble, at least through the end of this year. And what will the Fed get in return as collateral? Eurodollars that are quickly falling in value as of late. So even as our own economy may be falling back into recession, the Fed sees fit to bail out the European banks that are sinking in sovereign debt from the likes of Greece, Ireland and Portugal.

All eyes are on tomorrow's Fed Open Market Committee policy statement. The Fed is expected to announce its so-called "Operation Twist" strategy that is intended to lower medium and long-term interest rates, which may or may not work. Some people expect the Fed to comment on its latest decision to make unlimited US dollar loans to European banks, but I will be very surprised if they mention a word about it. They're keeping it very quiet (which is another good reason to read my E-Letters and blog postings).

Speaking of blog postings, I will write about tomorrow's Fed policy decision on my blog before the end of the day tomorrow. Go to www.GaryDHalbert.com and subscribe to read my take on the Fed's announcement.

Following the Fed discussion, I will bring you the highlights of the latest report on US poverty from the Census Bureau. Poverty is now at an all-time high. Ditto for the number of Americans that depend on food stamps, according to the Department of Agriculture. These two reports are very troubling.

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On April 12, the International Monetary Fund (IMF) increased the capacity of its emergency lending fund from $50 billion to $550 billion, a ten-fold increase. Less than a month later, the European Union announced a near $1 trillion bailout fund to aid Greece and any other countries in Europe that may get into trouble. At the same time, the EU announced that the IMF will be chipping in apprx. one-third ($321 billion) of the near $1 trillion bailout. Since the US is the IMF's largest contributor, this means that US taxpayers will be footing part of the bill to bailout Greece and possibly other European countries. Isn't that just dandy! And it gets even worse, so be sure to read on.

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As the stock market struggles to hold onto March's gains, many investors are now thinking about getting back into the market. While it's not yet clear whether we've seen the worst of this bear market, there are ways to get a jump on repairing the damage many investors have incurred in their portfolios by using investments that are not historically correlated to movements of the stock market.

Almost all financial advisors caution their clients to resist the temptation to put all their money into risky ventures that promise to make up lost ground - and I wholeheartedly agree with this advice. However, including aggressive strategies as a small allocation in an otherwise moderate investment portfolio can provide the potential for growth no matter what the market's direction. There are no guarantees, of course.

To that end, I'm going to discuss two aggressive investment programs that I have previously introduced in my E-Letter. I think either program might be a suitable addition for a portion of a diversified portfolio, depending upon your goals and risk tolerance. However, since we don't know what future market conditions may be, a combination of these programs might be a viable long-term option for a portfolio designed to repair the bear market's damages....

Since taking office on January 20, President Barack Obama has proposed new government spending of almost $3 trillion dollars. Yes, $3 trillion consisting of his $787 billion "stimulus" package, up to $2 trillion in bank bailouts proposed by Treasury Secretary Geithner earlier this month, and another $275 billion for homeowners and mortgage companies that Obama announced last week. The question is, who is going to buy this gargantuan amount of US Treasury debt over the next few years? With the global recession, the largest foreign buyers of Treasuries, like China, Japan and Europe, may not be in a position to keep buying our debt. It now appears the US Federal Reserve will be called upon as the "lender of last resort," but the Fed will be forced to print these trillions in new money. That could trigger another round of big inflation (hyperinflation, some predict) in the coming years. This week, I will explore the implications of this record spending and borrowing. Be warned that what follows is not pretty, but it is what it is. The latest plunge in the stock markets is indicative of just how precarious the situation is. As investors, we need to understand what is happening and how to react to it. Let's get started....

The Senate finally passed its version of President Obama's near $1 trillion economic "stimulus" package. But as Americans saw that this so-called stimulus package is loaded with pork-barrel spending and does not include nearly enough in tax cuts and direct incentives, public support for it plummeted. The Republicans' alternative plans that proposed more in tax cuts were ignored (of course). I have numerous problems with the giant stimulus program, especially regarding the "protectionism" elements as you will see. Finally, earlier today Treasury Secretary Geithner announced a new plan to spend $2-$3 trillion to bail out banks, buy troubled assets, unfreeze the credit markets, etc., etc. I will have more to say about this as the details become available....

As we kick off the New Year, let's review the latest dismal economic and financial data and the consensus views of what lies ahead in 2009 for the economy, the credit crisis and the markets. As you might expect, most of my trusted sources believe that the recession will be with us for a while, but there is hope that the economy will begin to bottom out sometime late this year - aided by more huge government bailouts that President-elect Obama has in store for us....

This week, we ponder whether the giant $700 billion bailout plan is large enough. There are some smart people who believe it is not enough, as you will read below. There are also many who argue that the government needs to inject capital directly into the largest banks to get them lending again. This morning, President Bush announced just such a plan to inject up to $250 billion in US banks in return for stock in their companies. I will discuss this latest bank rescue plan as we go along, as well as the progress on the larger bailout plan. Finally, I will give you thoughts on what you should be doing in the stock market in light of the latest historical plunge....