The appetite for “Crystal Ball” predictions seems to be insatiable. Despite the fact that I am consistently wrong on the timing of my predictions, not the direction, I’m good at that, but when it happens, not so good, I have been asked to do another prediction article.

With that in mind, I have decided to give you a feel for what some of the best people I know in the money business are thinking. Not saying, thinking.

I’m not a mind reader, although many of my former clients expected me to be, but I do have a source for great financial information that is virtually untapped.

My home is in a little area of Baltimore near the harbor that is within walking distance of most of the big brokerage and banking businesses in downtown.  As you might expect, we have more than our share of bankers, analysts, brokers and every kind of financial type living in our neighborhood.

Right in the center of our neighborhood is a bistro called Regi’s.  It’s not only the preferred watering hole; it’s a great restaurant, too.

Any night of the week, this place is packed with some of the best minds in the money business. The real deal. Men and women who actually work in the business of packaging mortgages, putting together bond deals and doing equity offerings. They don’t write about it and no one is asking their opinion about what is going on, they are the people who are actually doing it.

Here’s what they’re saying about 2009. While the ideas aren’t specific, they are from folks who know the biz from the real inside and confirm much of what I have been thinking for sometime.

One guy creates mortgage products. He’s the only person I know who really knows what a Tranche is. Tranche is a word that has been thrown around by mortgage financial types for about 20 years, but this guy can actually explain how it affects my money. Let’s call him Ted.

Ted was the first guy who spelled out for me why congress is really responsible for this credit/mortgage/banking crisis. He was the first, and to date the only person, who nailed down the fact that congress mandated that banks, and Fannie and Freddie, accept mortgages from people who could normally never qualify for one. All of this was in the name of the “American Dream,” that quickly became the world’s nightmare.

Ted is cautiously buying equities with the expectation that we will have a lot of ups and downs before we turn the corner, but we will turn the corner in 2009. Ted is also very confident that the mortgage crisis is moving along nicely.

Sally is in the tax-free bond business. She sets up and runs deals to finance public service projects. She, like a lot of other people, knows we will survive this current garbage market. She also agrees with the majority of the pros I talk to that this is the best buying opportunity in her lifetime. She is cautious and feels we need to tread lightly, but is buying now.

Dave is in business insurance. He sets up insurance programs for small and large business. He spends most of his day talking directly to the top players in a number of industries. He thinks we are in deep trouble. He sees a complete lack of leadership in Washington, at all levels, in both parties. The result of this vacuum is that we are at best trading water and most likely sinking slowly into an extended recession with deflation most likely.

His greatest fear is not the bailouts or the amount of money the Fed has to print, or even the endless debt. His fear is that when all the loans from the bailouts are repaid, congress will just spend that, too.

On the topic of real estate, almost to the person, the response is, “what did they expect.” You give mortgages to people who cannot afford them and they default? You then sell these worthless mortgages to banks all over the world and the banks go broke because of it. You’re surprised?

Still, there is optimism about real estate. It’s a waiting game. Prices have begun to bottom in our market, the really over leveraged markets, (Nevada, Florida, California), still have a way to go. They are sitting tight and waiting out the defaults.

Overall, everyone thinks we are in the best buying market of their adult lives. No one is calling a bottom and no one is calling for a short- term top. Everyone is a cautious buyer. Everyone expects to have many ups and downs before we level off late next year.

Some are throwing around numbers in the 7000’s as a low for 2009.

The areas they like best are anywhere business spending isn’t required, necessary consumables, drugs, personal items, infrastructure construction and telecom.

Their biggest concern, how will we ever absorb all of the money being printed, and what kind of inflation risk do we run after all this new money hits the system. Even my giant-brain friends don’t have the answers to these issues.

The good news, no one is running scared, everyone is buying on the dips, everyone is confident we are doing the right things to get the economy moving again, most feel Obama was the right choice for the times. There’s a lot of money to be made but you have to get in before it gets too expensive.

That’s it. If you’ve been selling and running scared you might want to consider what the real pros are doing with their money.

Keep your eye on the horizon and your powder dry.

Source: What The Insiders See In 2009