Obama's 2009 Challenge -- HUGE DEFICIT

I am still getting over the euphoria of Obama getting elected :-)

But now President Obama will be facing major problems left behind by the Dick 'n Bush Administration.

For one thing, IMHO next years deficit will be HUGE. Here is why.

On the revenue side:
1) The revenues that come from capital gains will pretty much disappear otherwise shrink tremendously. The stock market losses and Cap gains from Real Estate sales will make this part of revenue small; in fact I think people may carry it to 2010 taxes.
2) There will be lots of write downs by financials and businesses, and lower income tax revenues given the high unemployment. Lower revenues from oil and commodities, and the general economic down turn. ... Revenues will be lower.

3) Then there is the part on the spending side -- unemployment benefit extensions, bail outs and loans, and stimulus packages of various kind. We are talking Any $ coming from scaling back the war can not be that large -- perhaps it will pay for part of the deficit.

To address this I think the government will have to:
1) sell more T-Bills, this usually increases the interest rates,
2) some of the programs will be scaled back.Given a down turn in the economy, the question is which ones.
3) I think Obama will have a stimulus package as he has promised. But I think he is brilliant, and together with the congress they won't be just writing checks.

I think there be a lot of infrastructure repair programs. This will help the construction sector, and it's the type of the work that needs to get done anyway. Unfortunately infrastructure repairs are not sexy. That's why it hasn't been done so far, and that's why it is being dropped on President Obama's shoulders. I am hoping the government will be smart and issue a lot of jobs to small contractors as opposed to the Bechtel's and Flour's of this world that F'ed us on the Iraq War.

4) the government will print more money. This is obviously inflation causing but now they are talking about a deflation, so this can be helpful.

I can see Gov cutting back on defence contracts -- short selling LMC? And there will be more drop in oil. I am hopeful that the government will go after the energy companies -- directly and indirectly. Short selling resources?

Cheers, E