The hysteria regarding the raising of the debt ceiling and the threat by the President to not pay Social Security, the military and interest on Treasuries seems a bit confusing. I recall that in past fifty or so years there have been five or six times when the debt ceiling was not raised (in time) and nothing happened, other than Federal employees got a paid vacation (retroactively). There is more than sufficient ongoing income from tax receipts to pay for Social Security, the military salaries and the interest on the debt. A move by President Obama in which the government does not pay Social Security and or military salaries and or the interest on debt would GUARANTEE that no Democrat would be elected President for a generation. So despite what the President is saying, I am sure that all of those items will be paid.
The plan announced yesterday by Senator Coburn to trim $9 trillion over 10 years; is the first step in the right direction. The plan which offers $8 trillion in spending cuts and $1 trillion in tax increases, which are really closing up of loopholes. Without serious (which I define as balanced budgets, real soon) efforts to balance the budget, then run surpluses, the United States – within ten, twenty, or certainly thirty years will be worse off than Greece is today.
- – The DJIA should correct some more before going to new post 2008-2009 highs, but will not likely exceed the prior all time highs.
- – Gold has risen to new all time highs, which may be as high as $1700 or so before a major correction.
- – Oil is still in a trading range, but should rise to about $125.
- – Interest rates on the long term Treasuries are still falling, but should start to rise soon.
- – The dollar is holding in a narrow range.
- – Real estate pricing is still falling.
- – The economy is still very weak.
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