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In my September 29 E-Letter, I wrote extensively about the looming crisis in the commercial real estate sector. Things have not improved since my late September letter, and in fact have gotten even worse, despite the pick-up in the economy in the 3Q. Commercial real estate prices have continued to fall, and foreclosures continue to rise.

The core problem with the commercial real estate (CRE) market is the $3.5 trillion in outstanding mortgage debt. Of that amount, an estimated $1.3-$1.5 trillion of outstanding loans will have to be refinanced in the next 3-4 years alone. Banks are still overloaded with CRE debt; investors have soured on collateralized mortgage securities; and there is not nearly enough money in REITs to buy up all the CRE property that fails.

So, it is a real possibility that we will have yet another credit crisis on our hands over the next few years, which supports my view that this could well be a double-dip recession, with the second downturn sparked by widespread defaults and foreclosures in commercial real estate.

The Dalbar organization recently completed the 15th update of their landmark Quantitative Analysis of Investor Behavior (QAIB) Study. As long-time readers know, I have often quoted statistics from these annual updates that show average investors receive inferior long-term returns when compared to gains posted by stock and bond mutual funds. The reason, by and large, is that investors switch from fund to fund chasing hot returns. In doing so, they often end up with low returns, and sometimes even losses. Most interesting, however, is that the 2009 Dalbar QAIB Study update finally comes to the realization that traditional buy-and-hold approaches do not work, and that investors continue to panic and trade out of stocks when losses run high. In other words, emotions often trump rational investor behavior. This week, I'll update you on the most recent Dalbar Study findings, and also discuss our solution to emotional trading that we discovered back in 1995.

The US dollar has been in a multi-year decline since peaking in 2001. While there was a temporary 'rush to safety' rebound in the dollar due to the global credit crisis in 2008, the dollar has resumed its long-term downtrend as of early March of this year. Now, more and more forecasters are suggesting that the dollar may lose its global "reserve currency" status if it continues to decline. Some are even calling for the establishment of an all-new global currency to replace the dollar entirely.

This week, we will explore how the US dollar came to become the world's reserve currency and how difficult it would be to replace the dollar as the reserve currency, or replace it entirely with a new global currency. We will look at the major price trends in the dollar over the years and try to put the current decline into perspective. I will make the case that the US dollar will remain the global reserve currency for at least several more years. It should make for an interesting letter, so let's get started.

The market goes up, the market goes down. Will we have a sustained rally, or is this just a 'sucker rally' that will soon end with a significant downturn? As we look to the experts to help answer these questions, we find that their predictions are all over the map. Many quantitative models are saying the market is severely overbought, while those relying on fundamental analysis say the market is fairly priced. It seems that the more 'expert' opinions we get, the more confusing it becomes for investors to know what to do.

The biggest question for investors who are currently on the sidelines is whether they have missed the majority of the bull market rally, or if it still has a way to go. This is especially true in the case of Baby Boomers, whose retirement nest eggs have been hit by two major bear markets within a decade. They need the growth that the market has the potential to produce, but can't stand another major down market, which may also be in the cards.

This week, I'm going to discuss the various viewpoints both for and against a sustained market rally. As you will see, both sides are supported by facts, figures and historical precedent. They can't both be right, but both could be wrong should the market be headed into a broad trading range.

President Obama addressed a rare joint session of Congress on September 9 when he spoke at length about his desire to substantially reform America’s healthcare system. Whether you are among the apprx. 56% of Americans who now oppose the healthcare reform bill in the House, or you are among the apprx. 43% who support it (latest Rasmussen poll), it is important to know the facts - a number of which the president failed to address or misrepresented in his speech.

While I have refrained from writing at length on the healthcare reform debate, I feel the issue is just too important, and too politically charged, not to speak out. In the pages that follow, we will delve into some of the biggest problems and challenges with the House healthcare bill, H.R. 3200 - America's Affordable Health Choices Act of 2009. Given that there is so much misinformation on healthcare reform out there, on both sides, maybe this will help.

Most (but not all) of the economic reports over the last month or so have been positive, and more and more forecasters now believe that GDP growth will be slightly positive in the 3Q. Unfortunately, we don't get our first 3Q GDP estimate until the end of October. The latest GDP estimate for the 2Q was unchanged at -1.0%, which was better than expected. I will cover the latest encouraging (and not so encouraging) economic news just below.

Next, on Friday, August 21, the Obama administration quietly announced that the White House Office of Management & Budget revised upward its long-term federal deficit projections to fall in line with those of the Congressional Budget Office. The White House finally admitted that its economic assumptions were too optimistic - to the tune of $2 trillion over the next 10 years. So now it's official - even President Obama admits he will more than double the national debt in the next 10 years, which will likely lead to another financial crisis.

Over the last month, we have seen several encouraging economic reports: 2Q GDP was down considerably less than expected (-1.0%); the unemployment rate officially fell slightly in July to 9.4%; and the ISM manufacturing index posted a nice improvement last month. As a result, many forecasters have declared that the recession is over. This week, we will look at the latest economic reports which suggest that we've seen the worst of the recession, but do NOT mean the recession is over. I will also reprint excerpts from a recent economic and market analysis from Dr. John P. Hussman, of the Hussman fund family, which I think you will find interesting.

Last Friday's better than expected GDP report has caused many forecasters to declare that the recession is ending. While I would say that it is still too early to declare that the recession is ending, the latest data strongly suggests that we've seen the worst of this recession and the credit crisis. Even if the recession is ending, economic growth going forward is likely to remain disappointing since the unemployment rate will continue higher for some time to come. We will look at the latest economic numbers and draw some conclusions as we go along. We will also look at the latest survey of over 100 large hedge fund managers and what they predict for the economy, stocks, interest rates, etc. It all should make for interesting reading.