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Arnold’s Ramblings 6-7-2011

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In keeping with last weeks theme, Portugal has voted out (decisively) its Socialist government replaced by a moderate to right government with a coalition of the Conservative Party. Except for the United States, every major country with a democracy has chosen not to be socialistic. Why is that? What do Portugal, Canada, Spain, Germany, France, and all of the other countries that have also done so know that we don’t? Maybe they know that socialism has failed everywhere in the world.

The employment numbers were really terrible. Those numbers that were announced on Friday, which also indicated that the unemployment rate was 9.1%; but with under employed and those giving up looking for employment the numbers are actually around 20%. The bigger issue is that this is the worst “recovery” since BEFORE the Great Depression. Traditionally after a recession has ended the growth in the first year is in the 7% to 9% range before leveling off in the 4% to 6% range. Not this time. And we are experiencing decelerating growth after only three quarters. This has not happened in almost 100 years.

•  The DJIA looks higher in the short term, followed by another correction, followed by a major drop.
•  Gold could go to new nominal new highs.
•  The dollar is correcting again with all the uncertainty.
•  Interest rates are still in a trading range.
•  Oil is also in a trading range.
•  Real estate is clearly falling again and looks about 20% lower.
•  The economy is also clearly weakening. The question is whether or not this is temporary. I believe this is the beginning of another down swing.



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