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Arnold’s Ramblings 5-17-2011

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The past several weeks have been a blur in terms of geopolitics and the economy. I actually spent Saturday attempting to study what is going on in the world. After maybe six or seven hours, it readily became apparent to me that there is no place in the world (maybe an exaggeration) where there is not some major geopolitical or economic issue. This was amazing. Virtually the entire Middle East (except) Israel has some form of “democratic” movements afoot. Europe is going through a major economic meltdown. Asia, while stronger economically still has major problems relating to the Chinese economic slowdown. Africa is continuing to experience limited economic growth and many countries are experiencing volatile political environments. South and Central America is experiencing mixed results and renewed socialist and communist interests. Well, that is a quick summary of world geopolitics.

And then there is the new controversy regarding the killing of Osama bin Laden. Now, many on the far left led by Michael Moore are stating that bin Laden should have been captured, not killed. And with this controversy, comes the further “enhanced interrogation” discussion. Apparently, many Republicans stated that bin Laden’s location was found via “enhanced interrogation” methods. Further, CIA chief Panetta (soon to be Secretary of Defense) confirms this assertion. This has made the far left completely obsessed with this issue.

Secretary of Treasury Geitner has now given Congress until August 2, 2011 to pass the increase in the debt ceiling. The Republicans (at least today) are holding out for spending cuts before the passage of an increase in the debt ceiling. But last month, the 2011 budget was finally passed with an alleged $38.5 billion in savings; and as recently as yesterday CBO has now corrected that $38.5 billion in savings to now $3 billion in new spending! So, will Congress ever reduce spending? Probably not without the same pressure that Greece, Ireland, et al are experiencing.

•  The DJIA is in a trading range, and probably will drop further before a further rise to new post 2007 highs, but will not surpass the all time highs.
•  Gold may exceed its prior highs, but probably not, before resuming its drop. Silver (which I do not follow here) looks as though the top is in, and silver is head for $15 to $20 or less.
•  Oil is also in a trading range. I do not know which way oil will go. We will have to see whether it breaks above $115 or below $85.
•  Interest rates are still falling somewhat, at some point the inflation issues will cause interest rates to rise.
•  The dollar appears to have bottomed.
•  Real estate pricing is still falling in most markets.
•  The economy looks as though we are at a crossroads. Either we will start showing much more growth (which I doubt) or the economy will continue to erode.

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