Arnold’s Ramblings 7-5-2011

The Republicans and Democrats are discussing a short term agreement on the debt ceiling, which has two very bad effects: first, a short term resolution will not encompass any significant spending reductions or tax increases; and second, this issue will then be around for the 2012 Presidential elections. It would seem to Arnold that this should not be a political issue, but a survival issue. Do we Americans want to experience Greece’s situation? Do we Americans want to experience Ireland’s experience? The longer we delay a decision, which actually may solve this debt crisis, the worse it will be.

For now, Greece appears to have survived. But for how long? And what about Portugal, Ireland, Italy and Spain? And what about all of the other unstable countries out there? The next 18 months should be rather difficult, with sovereign defaults occurring.

The United States municipal market also looks as though there will be massive defaults. Some state and local governments are reducing costs and working at viable solutions, but many states and local governments are not. And those states and local governments that do not significantly reduce expenses will ultimately either default (as in the case of local governments) or potentially be reorganized (in the case of the states, which by law cannot file for bankruptcy).

•  The DJIA looks lower short term, then should rise to a new post all time high, though not reach an all time high, then drop significantly.
•  Gold looks to be going to new highs, but not silver.
•  Oil is rising again, should rise above $100 the barrel, and maybe reach $125.
•  Interest rates are still in a trading range, though higher, and rates should rise (on the 30 year Treasury).
•  The dollar is still doing well, and should do much better over time.
•  Real estate continues to look much lower.
•  The economy continues to look and feel weak.


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 diligence 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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