1. Prez O takes office with large majorities in both houses of Congress. It's OK since Repubs and Demos are both owned by special interests.
2. Their 'fix' for the tanking economy is a $780 bil stimulus plan that is layered with social welfare extensions that have no lasting effect on the economy and do not put people to work. Remember how everyone in winter '08-'09 thought the stimulus would be infrastructure and alt energy projects? Wrong. US prints money (the Fed's quantitative easing program) and takes on nearly 2 tril in debt in 2009. Note: the 2009 budget was done in 2009 by the Pelosi-Reid-Obama team.
3. Economy keeps tanking with banks holding the US hostage while still making profits from which they pay big bonuses. Instead of fixing/breaking up the big banks, the Dems make the move to 'fix healthcare'. I won't touch the automaker bailouts and losses.
4. Economy keeps tanking. As stimulus is proven to be no help, talk of a 2nd major stimulus program starts. Tax receipts drop further as unemployment is far worse than anticipated, making borrowing problems worse.5. Healthcare will probably pass (House just approved it yesterday by 5 votes) which includes multiple new taxes, including a removel of the inflation indexing for income tax brackets. This still leaves a half trillion shortfall in covering the plan's costs. Oh yeah, it's illegal to not have coverage. This program will help get people to work how?
6. In early 2010, we'll see a second stimulus intiative or program. This one will be focused on 'jobs'. More debt will be floated.
7. US Federal Creditors say enough is enough and a Treasury bill auction fails. Rates skyrocket, hell breaks loose. In June people worried a small blip up in interest rates would choke the recovery. I know, what recovery?
8. Bush tax cuts expire. US reverts back to 2000 level taxes, the lower & middle class get crushed with the tax increase. Worst thing to have in the middle of a recession. Don't worry about the rich, they can handle a 3% jump. Because of inflation combined with non-indexed tax brackets, the poor & middle class are suddenly in higher marginal tax brackets than they anticipated. Obama blames Bush somehow despite having the power as Prez to prevent this.
9. Nothing changes with the TBTF banks, there's no engine for economic growth or even make work temporary jobs govt programs, unemployment is still double digits, US Federal Govt borrowing costs are much higher, interest on the national debt is a large burden due to interest rate increases and debt rollover, and no social welfare programs are rolled back because of ineffective leadership.
10. There will either be a sovereign default by the US, a firesale of US federal assets (they are the largest landowner in America), or several years with 20-25% inflation in an Argentina style devaluation to hopefully weasel out of debt problems.
The faulty assumption, which McCain would have made just as Obama's team has made, was that this recession would be a 'normal' recession just like the last few. Few people, if any, in Washington understand the depth of the problem, the structural change our economy is going through, or a rational approach to helping the economy flush toxic waste and get fixed. Few understood just how arcane financial products & innovation had become. Few have ever worked in the real world.
In other words, gold looks good even at $1000 an ounce (silver too).