Obama faces quagmire as deflation looms

As Barack Obama was sworn in as the 44th President of the United States, fears were growing that the recession could morph into a deflationary slump.

The optimism and goodwill that greeted Barack Obama's swearing-in was palpable in Washington and across the world. Wall Street, however, was concentrating on the economic quagmire he inherits. It knocked 5% off the S&P 500 the worst inauguration day performance ever.

The worst recession since the Second World War...

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