BO's ugly October (and I don't mean Halloween)

In a previous post, I told you to keep your eye on September 30th, or the end of the federal fiscal year.

Normally, the President and Congress close the books at the end of September.

Also, this is the day that The Fed sells treasuries to make up for the deficit.

In recent years, it's been very easy: 2 or 3% of our GDP. No sweat!

It won't be easy this fall: 10-15% of our GDP. We have never been there before!

Around October 1, Chairman Bernake will make a very difficult trip to The White House.

He will tell Pres BO that we can't find $2 trillion of buyers!

He will also tell Pres BO that we have a few ugly options.

Check out Dick Morris and Obama’s issues crumbling :

"If Obama refuses to cut back on his spending/stimulus plans (despite convincing evidence that Americans are not spending the money), he has three options:

a) He can raise taxes, which will trigger a deeper recession;

b) He can print money, which will trigger huge inflation;

c) He can pay more interest to borrow money, which will send the economy diving down again."

They are horrible options.

There are already concerns about interest rates: Spike in Interest Rates Could Choke Recovery

There are some problems in the Dem party over the deficits and the health care proposals that will cost billions of dollars. Like closing GITMO, it's a lot easier to talk about health care in the campaign than to actually come up with a plan. Just ask the Clinton '94: Centrist Dems raise big concerns

So far, Pres BO has blamed Pres Bush. He can't do that too much longer. BO owns the deficits because of the mammoth $800 billion stimulus that hasn't stimulated anything: Blaming the Guy Who Came Before Doesn’t Work Long By PETER BAKER

Sooner or later, this massive government surge will run out of money: Reagan in Reverse: Obama's big government will run out of gas by Gary Andres.

Again, we don't have the money. The Economist calls it: Seeing red

Let's hope that he has the mental toughness to ride it out! It will be an awful 12-18 months for Pres Obama.

P.S. Check out this interview with Dr. Lafler and the possibility of inflation: