Mathematically speaking that is a critical point. The rate of decline has reached its lowest point, the derivative of the decline of the economy I suppose.

It is a good sign I guess.

Except there is nothing saying that this graph is a parabola, and it could easily have multiple local minimums on the way down to the absolute minimum.

tell me something we don't know.

Yes Obama recently re-affirmed his committment that he made on the campaign trail.  I know on the trail he said "no new taxes of any kind for families making less than $250,000" which he has violated with the cigerette taxes but if you bring that back to just "no new payroll and income taxes" then he is still adhering to it - so long as he doesn't go on a sin-tax spree I'll give him the credit for it.

With his restating that he won't raise taxes I'm actually not sure if he will raise taxes anymore (before I thought for sure he would).  But if he doesn't lower spending and he doesn't raise taxes the debate here about what the economy is going to do is pointless because it doesn't take a genius to see its going to implode rather quickly.  I mean:

existing large defecit + massive spending + no new revenue + contracting economy = unmitigated disaster 

...truthfully a very simple equation.  Something has to give - either his promise or the spending.  I hope the spending and honestly if he reigns in spending by a fair margin and THEN asks for Americans to pay higher taxes I will be open to hear his proposal - right now I think a lot of people want to see that they are serious about bringing things under control before agreeing to higher taxes - it just seems like they are more likely to spend the additional revenues than they are to actually balance or pay down anything.

Sqrl disaster is not guaranteed, the big question is whether China and other big dollar holders have willingness to spend their dollars on US treasury bonds, which is how the US government is raising money to pay for the deficits. Lately the US has been issuing a lot of those bonds, I think it got to more than $200 billion in one of the latest few weeks.

If those countries do not buy enough of USA's bonds, AFAIK the only options for USA are:

1- The Federal reserve prints a massive amount of dollars to buy those bonds (which is inflationary and reduces the value of China's US assets, potentially pissing them off and making the problem even bigger)

2- Raise taxes.

3- Decrease spending.

4- A combination of the above.

I'm not saying it is gaurunteed regardless - only that it is gaurunteed if we keep spending at this rate without changing something significantly in the equation.  Raising taxes (#2 on your list) and Decreasing spending (#3 on your list) being the two examples I gave of "changing something". If nothing does change then our ability to borrow and print (#1 on your list) those dollars will not last for long.

Sqrl I think alternative #1 is already happening, after seeing this:

http://market-ticker.denninger.net/archives/1304-BLATANT-Monetization-Uncovered.html

The US is covertly printing dollars to bail out its economy... this can end very badly.

Poof, hundreds of billions just came into existance. So they wrote a cheque to themselves and cashed it from their own bank using money they didn't have?

Hmm printing money = desperation am I right? In the most severe cases they have had to change currency, Germany 1920's IIRC as an example.

Yeah the US treasury gave the US central bank a post-dated check which the central bank bought with money created out of nothing.

Of course, they didn't do this the usual way (the fed can buy treasury bonds without a problem, in fact they have done it several times).  They did it through a primary dealer, to make it look like there was real demand for US treasury bonds from the dealers.

Printing money is like the easiest way to pay for debt and other things... of course your lenders will probably not be too happy.

That's why it's being done covertly.  Shhhh.