The European Union (EU) has always been a complex structure, but now it is becoming more so. Economic activity varies widely from country to country. For example, the more established economies of Germany, France and Italy are the strongest at this moment with the economies that were part of the Soviet Union, such as Romania, Hungary and the Czech Republic are much weaker. The EU discussed this matter recently and agreed to help Eastern European countries on a country by country basis.

European leaders of the Group of 20 took the first step in market regulation. The leaders said that all financial products, including hedge funds must be regulated.

The leaders also said that the resources of the International Monetary Fund must be doubled to $500 billion. British Prime Minister, Gordon Brown, said that the increased funds should be used to help Eastern European economies.

Members who were polled agreed that "all financial markets, products and participants including hedge funds and other private pools of capital which may pose systemic risk must be subjected to appropriate oversight and regulation."

When we say Europe, the countries of Germany France and Britain immediately come to mind. When we say emerging markets we often think of India and China. Yet in the heart of Europe we have a group of European emerging markets. Included here are the countries of Hungary, the Czech Republic and Poland.

Like the rest of Europe, these countries are suffering from the worldwide economic downturn. However the extent of the damage to their economies has been much worse than the rest of Europe. Much of the growth in these economies has come from foreign investment, thereby creating large foreign exchange debts.

Such is the case with the Polish zloty. The zloty hit its weakest level since joining the European Union. This is especially disappointing since plans are underway for Poland to adopt the euro in 2012.

So far this year the zloty has fallen 14% against the euro amid fears that Poland will find it difficult to finance its current account deficit. The situation is further aggravated because Poland is an export driven economy and exports have fallen off sharply.

The world's emerging markets are falling with amazing speed. This has caught everyone off guard. Let's look at some statistics that show the severity of this plunge:

• Taiwan's exports plunged 44% from the same month last year.
• Brazil's industrial production plunged 12.4% in December from the previous month.
• The Russian ruble and the Hungarian forint have dropped about 14% against the dollar.
• The South Korean currency, the won, has shed 8% of its value against the dollar and South Korea's industrial output dropped to its lowest level on record.
• The Mexican peso is at an all time low against the dollar.
• South Korea's exports fell more that 30% in January.

Why are investors shunning one of the most liquid and safest assets in the world?

The German auction of 10-year bonds failed to receive the 6 billion euros the government wanted to raise. Countries across Europe including the UK, Italy, Spain, Austria, Belgium, and the Netherlands, had either to struggle to sell their bonds or cancel their debt offerings because of lack of demand. This is particularly foreboding because this year governments around the world are looking to raise $3,000 billion, three times more than in 2008.

There is another deeper problem lurking beneath the surface. The purchase of a country's debt is based on faith that the government will pay the bondholders back in full. Could it be that investors in Europe are losing faith in their governments? That may be one reason for staying out of these markets.

Let's now cross the pond to the U.S. So far our Treasury auctions have had good demand with more bids than the amount of debt that was offered for sale. However, we just seen a crack in the auction of $30 billion of 3-year notes. The Treasury had to use an "indirect bid" to complete the sale. An indirect bid is used by the Treasury to buy its own securities. Also, some investors are moving back into corporate bonds with higher yields and out of U.S. Treasuries. With a $1.2 trillion dollar deficit, let's hope that investors do not lose their appetite for our bonds and notes. I don't think we really can count on other countries like China to help us out for two reasons. First, they have their own problems. And second, with our interest rates near zero, who would want to invest billions of dollars and receive virtually no return on capital.

Let's watch our Treasury auctions carefully to see if the European trend carries over to the U.S.

What are you thoughts on this trend?

This post is part of a special annual report -- Top Stock Picks '09 -- in which TheStockAdvisors.com asked 75 leading newsletter advisors to select their favorite investment for the new year.

International investing expert Nicholas Vardy looks to the iShares MSCI Emerging Markets Index (AMEX: EEM) as his favorite investment idea for 2009.

In his Global Stock Investor, he explains, "The exchange-traded fund is a bet that the initiatives of policy makers across the globe will be sufficient to trigger a sustained bounce in emerging markets stocks between now and the end of 2009.

"The policy responses to the global economic crisis have been both massive and coordinated. The European Central Bank has entered into foreign currency swaps with Iceland and Switzerland, even though they are outside the eurozone.

"The European Union joined forces with the International Monetary Fund (IMF) and the World Bank to provide loan facilities totaling $25 billion to Hungary.

"Recently, the U.S. Federal Reserve opened swap lines of $30 billion each to Brazil, Mexico, South Korea, and Singapore. All of these efforts combined will ease the shortage of dollars that has ravaged emerging markets.

"There are signs that the credit logjam that's frozen markets around the world in recent weeks may be breaking," states global expert Keith Fitz-Gerald. In his Money Map Reporter, he suggests that investors begin scaling in to new positions in Templeton Emerging Markets Fund (NYSE: EMF).

The advisor explains, "Assuming historical relationships remain true, Asian markets, followed by South American and European markets -- in that order -- have the most to gain coming out of this crisis.

"The other thing that history shows is that deep corrections tend to turn out to have been spectacular buying opportunities in retrospect, particularly when the credit markets that drive them relax. This is usually about six months prior to recognized recoveries.

"Templeton Emerging Markets Fund is trading at a 12% discount to net asset value and offers a 16.9% yield. Fully 58.2% of its assets are concentrated in and around the Asian region, which is running the highest cash reserves as a percentage of GDP on the planet.

"We plan to scale into a position in Templeton Emerging Markets Fund over the next few months. This not only keeps our overall risk down, but it helps us average in cost effectively."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

We all know the impact that the current economic slowdown has had on American auto sales, and today we get news that European car sales are also feeling the pain, with auto sales dipping 15% during the month of October.

According to the European Automobile Manufacturers Association, or the ACEA, October marks the sixth straight month that new-car registrations have fallen, but things have been much worse since the summer, when concerns of a global recession really started to spread.

General Motors Corporation (NYSE: GM) was the worst hit major American automaker, which had a 25% decline in sales in October on a year over year basis. Japanese maker, Toyota Motor Company (NYSE: TM) did not fare to much better, with a 24% dip in sales. Ford Motor Company (NYSE: F) did a little bit better, with a reported 11.9% decline in October sales. Europe's largest automaker, Volkswagen, held up the best among the majors, with "only" a 7.9% drop.