The Republican spending plan proposed by Rep. Paul Ryan that would cut $6 trillion from spending over the next ten years is still way way too little. When the projected cash shortfall over the next ten years is about $14 to $16 trillion dollars (and that is based upon 4% GDP growth each and every year, which ain’t going to happen), the Ryan proposal is at least $10 trillion short of solving the problem. It seems to me (as Arnold isn’t too bright) that cutting a trillion a year from spending is eminently doable and then we could eliminate thousands of loopholes or special tax deals impacting one or two companies and raise an additional trillion a year; then the United States would have a SURPLUS. What is a budget surplus, you ask? We have not had a budget surplus in nearly a century. The so called Clinton surplus was including social security’s surplus as part of the budget. The United States can have a budget surplus as soon as 2012, and the economy would soar in response. But neither the Republicans nor the Democrats have the intestinal fortitude to make it happen. Will the Tea Party be able to influence Republicans sufficiently to do what is necessary? I doubt it. Will the Tea Party split from the Republican Party? Probably, but not in 2011.
The reality that GE earned (by their reckoning) $5 billion in the United States and paid no taxes (and earned another $9 billion allegedly outside the United States) explains in simple illustration why the United States needs to close loopholes. There is no way an individual can earn $5 billion and pay no taxes. There is something called the (dreaded) AMT (alternative minimum tax) which forces individuals earning over a certain amount to pay a minimum tax.
Last week it was announced by the Federal Reserve Bank (after successful litigation forcing the Fed) that over 75% of the loans during the September 2008 period and beyond went to foreign banks. This illustrates why the Fed needs to be audited. A publicly held company with $1 million or less in revenues is required by the SEC to be audited; yet the largest bank in the world is exempt from audit. Why?
• The DJIA has been holding up remarkably well considering all of the bad news. This would indicate that once this correction ends, the markets should rise anew.
• Gold has been treading water. We may still see a high over $1500 the ounce; but in the face of this kind of news, without a major upward move, gold looks tired and will probably correct down at least 20%.
• Oil is doing relatively well. We could still see $125 a barrel with more Middle East turmoil.
• The dollar is still falling, but should bottom soon.
• Interest rates on the 30 year Treasuries are still in the 4.5% range, and should start to rise.
• Real estate pricing is still falling and will continue for the next year or so.
• The economy continues to look weak, but with the inflationary pressures, the economy will start to fall.
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