a confluence of events

As a confluence of events step onto the economic stage in the upcoming months they shall most surely provide us with very interesting fiscal theater. And as we anxiously watch these events unfold I am sure that we will be glued to our seats with anticipation as to how this melodrama will ultimately unfold.
Who wrote this script anyway?
1) The end of the Fed’s QE2 program
2) The US government’s debt ceiling reached
3) Double dip housing stress
4) Unemployment levels
5) The EU’s PIIGs leverage and growth dilemma
6) China’s inflation rate and slowing growth
7) Continuing strife and unsettledness in the middle east
prb

Some interesting economic data bits and pieces:

Leverage - The Fed’s Flow of Funds report found the deleveraging process to be continuing as the debt outstanding in US credit market declined to a three-year low of 336% of GDP. While that is down almost 10% (from 363% of GDP) at its peak in early 2009, it remains well above longer-term levels and there is room for the deleveraging trend to continue.

Federal Budget Deficits Are Structural, and Unsustainable - According to the baseline alternative scenario modeled by the bipartisan Congressional Budget Office (the alternative scenario that current policies continue into the future), federal spending on entitlement programs and debt service, alone, will exceed federal revenues in 14 years. Something must change. Either tax collections will have to in-crease or federal spending will have to be cut. Either way, this will drag on GDP for the foreseeable future. The worst-case scenario is more paralysis in Washington leading to a loss of confidence from global investors.

Market Reaction to Conclusion of QE2 Purchases Remains Uncertain -
While our analysis points to there being little market reaction to the end of QE2, this is still yet-to-be-seen. There is certainly the risk that the lack of buying from the Fed will result in higher yields. However, it looks more likely that the bid from other buyers will remain strong and yields will continue to respond to growth expectations, inflation expectations, and the global flight-to-quality. Our expectations are that yields are al-ready reflecting market sentiment and anything more than a 50 bps increase would be a surprise. There are plenty of analysts arguing that rates remaining flat is the strongest likelihood.
(Source: Weekly Outlook)