Amazingly the Democrats and the Republicans reached a deal to cut government spending by $38.5 billion. This almost half of what the Republicans wanted, so both sides can feel that there was an accomplishment. Tomorrow President Obama will release his deficit cutting plan which will no doubt be primarily a tax increase. The rumors are that President Obama will want to tax the rich (defined this week again as those making over $250,000 year). The “cost” of the continuation of the Bush tax cuts from leaving steady the tax on the “rich” was $60 billion per year; so using that factor; if those making $250,000 and more paid 100% of their incomes in tax, then the total increase in taxes paid would be about $800 billion a year; which would still leave a deficit of just under $1 trillion.
As Arnold has previously stated, we need to cut $1 trillion per year in spending and then cut out all of the tax subsidies and all of the tax loopholes. This would generate another $1 trillion a year and then we would have a surplus.
The candidacy of Donald Trump should shake up the Republican nomination a great deal. Mr. Trump’s views on China, OPEC, the economy and a multitude of other issues should generate a great deal of interest amongst Republicans and Democrats alike.
• The DJIA looks lower for the next couple of weeks; then rising to new highs since March 2009.
• Gold should reach at least $1500 before falling back in a solid correction.
• Oil could still reach $125 a barrel before correcting.
• The dollar is still falling, but may be bottoming here, soon.
• Interest rates had been rising, and should rise further.
• Real estate prices are falling and look lower.
• The economy continues to look lower.
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