With partisan politics and media telling their own twisted truth about the U.S. economy, perhaps the most accurate forecast comes from Europe.

The European Commission forecast on Monday that the 15-country Eurozone will grow a meager 0.1% next year – at best.

The global financial crisis has hit Europe like Hurricane Katrina flattened New Orleans. And we expect this is a clear indicator of how the U.S. will fare as we approach 2009.

What this means to investors is that the major emerging markets such as China and India may indeed be the place for their money. China and India are certainly down from the commodity supercycle heyday, but their growth far outstrips what we’re seeing (and can expect to see) in Western industrialized economies.

The European Commission said the Eurozone’s largest economies such as Italy, France and Germany will come to virtual standstill with the prospect of 0% growth.

At the same time, second-tier economies including Spain and Ireland will shrink.

And even though the U.K does not use the euro, the European Commission expects that economy to shrink by 1% – putting it in the same league as the struggling former Soviet satellites, Latvia and Estonia.

That was all the good news in a best-case scenario. The 27-member EU warned that the numbers could deteriorate if money gets even tighter – straining government coffers and virtually freezing consumer spending.

Worse, unemployment could reach 8.4% next year from a decade low of 7% at the end of 2007.

At the same time, government deficits could rise from 1.6% in 2008 to 2.3% in 2009. But some countries may suffer deficits of up to 3% including the U.K., Ireland, France, Latvia, Lithuania, Romania and Hungary.

The EU’s bleak future is characterized by unemployment, deficits and recession – the probable hallmarks of the American economy next year.

Sounding quite naïve (or stupid), Joaquín Almunia, the European commissioner for economic and monetary affairs, actually said that the EU’s interdependence of the global economy is “bigger than we thought, leading everybody to suffer.”

It almost makes the EU sound as though they still cling to the belief that that the world is flat.

While the EU’s forecast may not be a direct reflection of the U.S. economy in 2009, we do believe is provides an undistorted view into the impending future.

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