After $6 billion spent on this election cycle, we have nearly the exact same Republican controlled House and Democratic controlled Senate and, of course, Barack Obama won re-election. Get ready for more gridlock. I do think some kind of deal will be made, but there’s no way we get one unless some taxes go up and spending cuts are enacted. Congress and President have until the end of the year when mandatory cuts and tax increases take effect. This is why they are calling this a “Fiscal Cliff.”
It was revealed today that five days before the election, Iran took some shots at one of our drones. It was unarmed and reportedly flying over international waters, but that didn’t stop two Iranian war planes from trying to shoot it down. Shooting at a U.S. military aircraft could be considered an act of war, but I don’t think this will start one. The U.S. is in not-so-secret meetings with Iran to reign in its nuclear program. It looks like Iran feels it has the upper hand. The U.S. is in a very weak place as war could crash the U.S. economy. The $700 trillion derivatives market could go haywire and melt down if there was a war in the Middle East. Interest rates and oil prices could spike, and the dollar could suffer a steep selloff. That’s just a few of the things that could happen as a result of war in the Persian Gulf.
Meanwhile, Iran has announced it will hold “massive” air defense drills during the next few days. It looks to me that Iran is sending a message to the world it is not afraid of the U.S. or an attack by anybody.
Greece has voted for new pay cuts and benefit cuts in order to get another $40 billion from the European Union. It was the narrowest of margins that passed the austerity measures. Greece is suffering through riots and protests where people were chanting, “Fight! They’re drinking our blood!” Now, is that any way to talk about the bankers who are trying to control you? If you think this could never happen in the U.S., you are sadly mistaken.
Finally, not every market was down because of fears of the Fiscal Cliff. Gold was up for the week because it looks like nothing is going to stop or even slow down the money printing by the Fed that is of historic proportions.
Join Greg Hunter as he gives his analysis in the Weekly News Wrap-Up.