Futures (II)

Alternative future, best case scenario

1. The recession bottoms out soon. In fact, by May, the economy is growing. GM’s Volt is a success.
2. 2010 and 2011 are years of solid growth, so that the deficit naturally falls as the government acts counter-cyclically. The Obama predictions turn out not to be rosy scenarios at all. The budget is actually balanced by 2012.
3. The deleveraging of the financial system means that the massive Fed increases of money are not inflationary, so prices don’t rise and the dollar doesn’t fall. The bond markets never get angry.
4. Obama rides on the tails of this economic growth and is re-elected by a land-slide.