The Republican victory in the New York congressional race to fill Anthony Weiner’s former seat, after nearly 90 years in Democratic hands, is a big problem for the president. Of course, President Obama claims that the reason for the loss was the candidate, but let’s look at that: First, registered Democrats outnumber Republicans 3 to 1. Second, a large segment of the district is Jewish and staunchly pro-Israel. The Democratic candidate was an Orthodox Jew and staunchly pro-Israel. The winner was Catholic, and considered by many to be dull. Yet, the Republican won. Hmm….
The European mess is exactly that, a European mess. And the mess is getting messier every day. It seems clear that Europe is commencing a major economic contraction that should last for years. Many of the European countries will be forced to reduce the role of government in order to survive. Ultimately, that same result will manifest itself in the United States.
President Obama’s new deficit reduction plan is basically a $1.5 trillion tax increase, primarily on the rich, with the balance coming from savings in leaving Iraq and Afghanistan and from further cuts to Medicare and Medicaid. The problem is that in passing Obamacare, there were $500 billion in cuts to Medicare, including $250 billion in cuts to doctors for compensation, which have not been implemented. It is impossible that there will be over $750 billion in total savings in Medicare over the next 10 years. And the savings from leaving Iraq and Afghanistan — we have to leave Iraq and Afghanistan in order to count those.
- The DJIA looks as though there may be a further drop, before commencing a major advance into year’s end.
- Gold could hit $2,000 an ounce before a major correction.
- Oil still appears to be in a trading range between $80 and $90.
- Interest rates are still ridiculously low, but should start to head up by the fourth quarter.
- The dollar is rising nicely.
- Real estate pricing still is declining in most markets.
- The economy is still weak, but could show signs of strength in the fourth quarter.
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