So what is the worst case scenario? Consider that continued floods, droughts, perhaps a hurricane or two, perhaps more tornadoes, in other words more bad weather as predicted by global warming experts, continues to ravage the farmlands of the world. This will inevitably drive up commodities prices the world over, including the US. People will die.

War will continue and perhaps grow. There will be more demonstrations and more conflict, not just in the US. Pakistan is continually on the brink of war with India. North Korea is continually on the brink of war with South Korea. The middle east is in conflict in Libya, Yemen, Syria and perhaps next comes Iraq, not to mention Israel with the Gaza strip and even Jordan facing turmoil within its own borders. Egypt is in serious trouble with commodities prices increasing and the military is still running the country, the hat is worn by a different general, but really folks it ain't a democracy; I will believe it when I see it.

The US followed by Europe will be blamed for all this. The only way some will believe they can even the inequality will be through acts of terror. Al Qaeda will be a bit player, as will all the terrorists. Hey, making a bomb is easy, so is blowing up a rail line or a bus. Terrorism is effective by striking fear, not by winning battles. This will mean more military spending. More seal team sixes, and worst of all more Blackwater, now Xe, paid mercenaries. All of this will take resources away from fixing problems and destroying resources that solve problems.

And then there is energy. The impact of conflict is that energy prices will sky rocket. With them, the cost of everything will go up. This will happen anyway with shrinking oil supplies, but the conflict will hasten the process. With everything from commodities to computers increasing in price, there will be inflation. We can only hope that it is not the hyper inflation of post WW I Germany.

Financial markets and in particular "hedge funds" are making money had over foot. This would be wonderful, but the money is being made over nothing. Nothing at all. With the housing market collapsing this will again be evident. With production hardly increasing, this will become more evident. The bottom line is that for the financial industry to make money there must be more goods produced. Where does the money come from. The money comes from loans to industries/people who make products and from loans for real estate. Real estate also depends on people making products. Stagnant production or worse production to destroy, military production, is a loser. So the financial industry will collapse again, particularly with the poor (better than nothing) regulations implemented into law in the last two years.

One significant value of the financial industry is the exchange of money. The industry enables the production and sale of goods. Without sound financial institutions the economy goes to hell. Thus there will of necessity be another bail out, perhaps costing trillions of dollars to enable the economy to recover once again.

Besides being hampered by an unsound financial industry, industry is more hampered by a lack of spending. In the short term this is can be remedied by massive non defense spending. I used to say on the order of a trillion dollars a year for the next five years. Last year such spending would have been enough. Now I believe we need two trillion dollars a year over the next five years. Remember during WW II the US spent thirty trillion dollars of today's dollars over the period of five to six years. Relatively speaking two trillion dollars a year is moderate, hardly extreme.

But, what is happening is the opposite. Government at all levels, federal, state, county, city, township, is reducing spending. And it is going to get worse. There was a minor down turn from the budget compromise for 2011. So now the republicans are playing chicken with the debt ceiling. There will either be a minor down turn or a major down turn as a result of compromise. There is little doubt that the negotiations will drag out to the last minute and worse past the last minute. Fortunately investment in US bonds is the best investment in the world and will remain so. But confidence will be shaken and the federal reserve will have to create more money. What else is new.

The problem is unemployment will increase dramatically, higher than during the Great Depression. Now the president gets credit for the good and blame for the bad. Doesn't matter whether or not the president caused the good or bad, only that the president was in office. If republicans win the House, the Senate, and the Presidency in 2012 then catastrophe will strike with unemployment reaching fifty per cent or higher levels.

Yes this is a worst case scenario. But, this may very well happen and if President Obama does not change direction, not the direction of the country, but the direction of his leadership this will happen. I would bet on it, but there will will be no winnings.