The Working File

So we’re in a recession, at least, where one of the biggest problems is that people with money won’t lend it. Then the President stiff-arms secured creditors to pay off his union buddies, overturning basic law to do so. Who will lend money now, without seeking potentially high rewards with higher interest rates?

Scott Grannis at Calafia Beach Pundit predicts:

Rising interest rates are thus likely to be driven by a) an avalanche of Treasury supply and b) rising inflation. These are going to be the critical issues to focus on in coming years. I don’t think they mean that the economy will collapse. Instead, I think it is a good reason to expect that economic growth will be subpar (averaging less than 3%) for many years.

Here is the chart of Obama deficits that’s been making the rounds for a while:

Obama's Budget Deficit Projections

And it’s already out of date, and getting worse:

The White House on Monday projected 2009 and 2010 federal budget deficits far higher than it forecast just two and a half months ago, even as it continued to defy most experts and predict that the economy is headed for a strong comeback starting late this year.

Economists scoffed at the latest administration predictions.

“Deficits soar even with rosy assumptions in new Obama budget” at McClatchey
Heaven help us, but I don’t see how we avoid low growth and high inflation unless we change course soon.