Tell It To Al

“Flagrant violations” and “unethical practices” at a major U.S. bank?

Say it ain’t so.

Speculation runs rampant that Wikileaks is about to blow the lid off something at a major bank, and that bank may be Bank of America. Click here for the details in The Wall Street Journal.

Scuttlebutt, rumors, inuendo – maybe - but who puts anything past a bank these days? Bank of America denies knowledge. Wikileaks is just going to make us wait and see.

Too bad, Bank of America can’t bank on a solid reputation in times like these.

Ladies and gentlemen, welcome to the big fight.

In this corner, the man who called it “the mental recession” of a “nation of whiners,” former U.S. Sen. Phil Gramm.

And in this corner, the man who saw the economic collapse coming, “Dr. Doom,” a.k.a. New York University economics professor Nouriel Roubini.

Shake hands and come out swinging, boys. Click here to read column.

It’s always called the recovery. Never the recession.

It’s been called the fragile recovery, the sluggish recovery and  jobless recovery. Now they’re calling it the slowed recovery. Might as well call it the recovery-less recovery.

Click here to read column.

His voice is confident. His body languge - not so much. U.S. Treasury Secretary Timothy Geithner wrings his hands during an hour-long appearance in New York. Photo by Al Lewis.

I really wish Treasury Secretary Tim Geithner didn’t go around saying he thinks the U.S. will whether Europe’s debt crisis just fine.

Reminds me of the time his pal Ben Bernanke predicted the subprime loan debacle would be contained and not spread to the broader economy. Or the time BP CEO Tony Hayward said he was going to cap that oil gusher on the bottom of the Gulf. Or the time Enron CEO Ken Lay said his company was stronger than ever.

Click here to read Associated Press story on Geithner’s comments.

As many of you know, I make all of my economic forecasts using my trusty Magic 8-Ball, which is far more reliable than any economist or Wall Street analyst. Click here to see my previous blog post on how my 2009 predictions panned out.

Now for my predictions for 2010.

Do you really think the mortgage foreclosure crisis – which is the root cause of all of our economic woes – is over?

Think again.

RealtyTrac, a foreclosure information company, estimates there will be as many as 4 million foreclosures in 2010, up from 3.2 million this year.

About $2.5 trillion worth of adjustable rate mortgages will reset between July 2010 and August 2011 RealtyTrac estimates. Many of those homeowners will not be able to refinance because they’ve lost their jobs, so guess what happens, they default.

The good news is that we will very likely see the peak of the foreclosure crisis in 2010. That’s not to say it’s going away in 2011. But I predict it will reach its zenith and taper off by year end.

Now for unemployment. It hit 10.2% in 2009 and eased down to 10%. Few economists alive today can adequately predict the toll that double-digit unemployment takes on the economy over a prolonged period of time. They just haven’t seen it in their careers before.

And unfortunately, we will see very high unemployment and under-employment for the foreseeable future. Remember, we were shipping jobs overseas when the economy was booming. The only hope on the immediate horizon is for more government jobs. But my 8-Ball predicts unemployment will ease only slightly in 2010, if at all, and that it will not fall below 9%.

Guess what else? Oil is going back over $100 a barrel in 2010. This will be driven more by inflation or weakness in the dollar than demand. Remember the last time this happened and everybody started taking about alternative fuels? Well, that boom will be back on.

Bank failures hits 140 in 2009, the most since 1992. I predict we’ll top that figure in 2010. The FDIC has more than 550 banks on its list of problem banks, and that list keeps growing.

The big problem for small, regional banks, of course, is commercial real estate. These banks will have to absorb billions of dollars in commercial real estate losses in 2010. This will be a further drag on the banking system and the economy.

2009 was a great year for the stock market, bouncing off its lows, but it will suffer some pullbacks in 2010, and it may end the year flat to down. Investors will eventually come to realize the economy isn’t really recovering, but just getting trillions of dollars worth of government life support. The push and pull is likely to be highly volatile, though. On the plus side, the Dow could surpass 11,000. On the negative side, the Dow could retest the low it his in 2009 of nearly 6,500.

Gold will surpass $1,350 an ounce. It was up 24% this year, eclipsing $1,100, and I don’t see why it can’t do it again, given that all the problems of the world really haven’t been solved.

Growth in the nation’s Gross Domestic Product – if there is any – will continue to be largely driven by increased government spending. This will continue to give the National Bureau of Economic Research pause to officially declare the recession over.

Voters will not be happy with continued high unemployment and foreclosures, or our nation’s economic progress as a whole. Democrats will lose big in the November election. Too bad the Republicans, who will replace most of those voted out of office, don’t have the solution, either.

I am still formulating my predictions for 2010. My Magic 8-Ball keeps telling me to ask again later. If you have any thoughts, please send them my way.

Meantime, many of my predictions for 2009 have come to pass. Or missed the mark by merely a tad.

For instance, last December, when the Dow was not far from 9,000, I predicted it would fall below 6,000. But it only fell to 6,547.05 in March.

I did not foresee the extent to which the Federal Reserve Bank and the Treasury would commit taxpayer dollars to prop up our failing banking system, and by extension, the stock market.

Anyway, you be the judge. Here’s word-for-word what I wrote in my column last December:

“For 2009, I predict that housing foreclosures will continue to rise, causing almost everything else to keep declining.

“Problem loan portfolios at our biggest banks will become bigger than the federal government’s ability to bail them out. Auto makers will not magically turn viable, and at least one of them will have to undergo either a forced consolidation or a bankruptcy.

“The recession will continue through most, if not all, of the year, and when it’s over we will still be in a global economic malaise.

“Unemployment will come close to double digits by year-end. The Dow will slip below 6000. Gold will easily eclipse the $1,000-an-ounce mark.

“Oil prices will remain well below $100 a barrel for long enough to silence most serious talk about alternative energy and electric cars.

“Watch for suckers’ rallies. Stocks will spike. Low-interest rates will even encourage home sales. But most optimism will prove short-lived.”

Now if only I had this much insight for 2010. Be back to you with my Magic 8-Ball later.

Chicagoans thought they were such a shoe-in for the 2016 Summer Olympics that being eliminated in the first round brought audible gasps to the Daley Center, where gatherers got the news from Copenhagen via big screen TVs, the Associated Press reports.

As a native Chicagoan, I can’t say I’m surprised. Landing the Olympics is a competitive business. What were those blowhards in the Windy City thinking?

This is the kind of delusional optimism we see each year from Cubs fans.

Or from Sam Zell, the real estate magnate who bought the Chicago Tribune only to take it into bankruptcy.

Or from a former governor named Rod Blagojevich.

Or from the president who takes bows for saving the economy even as unemployment hits 9.8%.

I make a brief appearance in this report on Federal Reserve Chairman Ben Bernanke’s remark that the recession is very likely over on Denver’s NBC affiliate 9News.

The bad news is that Bernanke added plenty of caveats, saying unemployment and credit would remain challenging. In other words, the nation’s gross domestic product may be going up, but you are not.

Lending has declined for six consecutive months at the banks that got the biggest bailouts.

The Obama administration says it would have declined even more if it were not for the bailouts.

The nation’s unemployment rate is zooming toward double digits.

The Obama administration says it would be soaring even higher if it were not for the jobs it was saving.

The economy has remained in a deep recession since December 2007.

The Obama administration says if it would have been a depression were it not for the unprecedented actions it has taken.

Maybe all of this is true. But how is anyone to know? I mean, no matter how bad things get, things can always be worse.