Arnold’s Ramblings 2-1-2011


The State of the Union address was long on generalities, long on promises and short on specifics nor anything else. Again, President Obama is promising not to sign any legislation with earmarks. That was a promise President Obama made over and over again as a candidate, yet his first piece of legislation had 9000 earmarks. Oh well! Now President Obama is also promising a corporate tax cut, if it will not affect the deficit, yet President Obama wants spend hundreds of billions of dollars for investment (that means spending) without any concern for the deficit. Maybe because I am sick, but that seems like a contradiction.

President Obama also is calling for a freeze on all (discretionary) federal expenses for 5 years. If we freeze expenses and income just holds on, then we are still looking at well over a trillion dollar deficit annually.  Further, President Obama discussed the extensive overlapping of functions between agencies and departments. If President Obama does in fact deal with this problem, then the Federal Government payroll would be cut by at least 33% amounting to over one million jobs lost. And since his largest campaign contributor was/is the SEIU (the Federal Government employees union), I just do not see this happening.

President Obama also mentioned that there were millions of square feet on government space which has been vacant “for years”. Why doesn’t the government sell off the space, further consolidate space, and by selling off the real estate, the government could raise billions of dollars; save billions of dollars in expense; and also provide revenues to municipalities at the same time.

Newly elected Senator Rand Paul (R) Kentucky has proposed a $500 billion cut in spending in the first year alone. That is a good start, but he needs to find at least another $500 billion in the first year before it really amounts to anything.

The CBO (Congressional Budget Office) announced on Wednesday that the forecast for 2011 fiscal year end budget deficit is a new record of $1.5 trillion.

As usual arnold is confused. Maybe it is because I have been sick for weeks; but things make less and less sense. The thrust of Democrat (and Obama administration) is that it is alright to run trillions of dollars of deficits for investment (spending) for mostly things which will not be cost effective, but who cares. The effective Republican position is that we (the US) needs to cut spending by $500 billion over 10 years. Each concept is ridiculous. Senator Rand Paul as previously mentioned is looking to save $500 billion in one year. That is still not enough. Neither party appears to be serious, which is a big big problem.

And another point, the far left considers the Tea Party to be far right wingers, when in fact the vast majority of Tea Parties are libertarians. Libertarians tend to be social liberals and fiscal conservatives.

The violence and horror in Egypt (and Tunisia and Yemen; followed by Jordan) are indicative of the reality that these countries will become religious states, which is slowly, yet methodically taking over the Middle East. Once each of these acquisitions of these countries has been digested these, it would seem that Iran would go for the rest, Saudi Arabia, Kuwait, UAE, Libya, and all the rest. This is not a good situation. If they are successful oil prices will easily reach $200 a barrel; gold will easily reach $2500 the ounce, and our stock market (the DJIA) will be lucky to hold 5000. Yet, now the markets are not taking this at all seriously.

The DJIA is back about prior Egypt levels. I just don’t understand it.
Gold will rise if in fact the Middle East becomes a mess.
Oil will rise if the Middle east becomes a mess.
The dollar has been falling and breaking key support.
Interest rates are stacking back up. The 30 year Treasury is now well over 4.6%.
Real estate pricing is falling again in most markets.
And despite the GDP report I just do not see all this great growth.

Disclaimer: Arnold’s Ramblings Inc. and/or its writers, representatives, employees, shareholders, executives and affiliates may have a financial interest in any security recommended to readers or otherwise mentioned. Nobody associated with this website or Arnold’s Ramblings Inc. is a registered investment advisor. Everyone should review investment materials in detail and with due dilligence when possible, and should consult proper counsel prior to investing. All information and advice presented by Arnold’s Ramblings Inc. is believed to be accurate and reliable when posted, but cannot be guaranteed.

Copyright 2011 Arnold’s Ramblings Inc., All Rights Reserved.


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Arnold Goldin
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