I think we should expect a government shutdown. When you read the stances of the different leaders, and believe me I use the term loosely, it seems unlikely there will be any common ground found soon. One case is particular I will bring up is Harry Reid. As I look at the situation he faces I see little reason for him to soften his stance from a game theoretic perspective.
The Fed has been wrong about growth lately in their forecasts, and wrong in a very bad way. The Fed forecasts have not yet taken into account fundamental changes in individual behavior. It would not be a surprise that such forecasts were wrong during or in the immediate aftermath of the crisis, but to still be so wrong at this point is worrisome. What is the problem? People are scared.
The title pretty much sums up my thoughts about the approaches in Washington to the fiscal morass Congress and the Presidents created for us over the last several years. Neither political party exhibits anything close to leadership, neither displays any willingness to have meaningful debates on the issues. Instead we get bombarded by poorly crafted messages about the ineptitude of the other side while both groups wait for electoral alchemy to take place and give them the ability to govern without a check on their power.