The Day the Obama Administration Ended

Mark your calendars, everybody, because yesterday was a very important day. It was not only a day in which our debt was seen as unsustainable, but it is likely the day that sealed the coffin of Obama's potential second term.

Knowing the way the electorate may be, he might well win another four years in Washington. However, with the potential effects of the S&P downgrade-- this may be the event that will snap even some Obama supporters back to reality.

Let's take a look at some of the possible effects--

3. Needless to say, increasing costs for consumers and businesses tends to slow their economic activity. Some estimates put a downgrade like this as likely to shave 1 percent off GDP. This slowing certainly increases the risks that the U.S. will have a second dip into recession. It also means less tax revenue, so the potential for additional debt increases.

4. As the economy slows, expect the stock market to react. After all, investors buy shares to get a piece of growing profits. A slowing economy means profits grow less rapidly or go down. The relative value of a share of anything will go down. Some experts predict a downgrade could force stocks to sell-off by 6 percent to 10 percent in short order. That's another 1,100 points on the Dow.

5. A slowdown in economic activity also means less demand for workers. The non-partisan group Third Way has published estimates that a simple 0.5 percent increase in interest rates could erase more than 640,000 jobs.

These are terrible indicators and could have a similar effect as the crash of Bear Stearns and other investment banks in 2008. The economy, if hit with another 1,100 point loss, could point straight at recession. And considering the anemic job growth already, losing 600,000-plus would be disastrous.

This could be the day after the next recession started-- and the day after Obama lost his chance for a second term.

Please bookmark!